Responsive Document - CREW: Federal Reserve Board of Governors: Regarding Efforts To Influence Financial Regulatory Reform: 6/13/2012 - PDF 3

Not Responsive - Internal Emails Between Federal Reserve Staff
******************************************************************************************* Thomas M. Glassic Counsel, Committee on Financial Services United States House of Representatives 2129 Rayburn House Office Building Washington, DC 20515
(b)(6)
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[DISCUSSION DRAFT]
OCTOBER 27, 2009
TITLE IFINANCIAL STABILITY IMPROVEMENT

SEC. 1. SHORT TITLE. This title may be cited as the Financial Stability Improvement Act of 2009. SEC. 2. DEFINITIONS. For purposes of this Act, the following definitions apply: (1) Board means the Board of Governors of the Federal Reserve System. (2) Council means the Financial Services Oversight Council established under section 1001 of this Act. (3) Federal financial regulatory agency means any agency that has a voting member of the Council as set forth in section 1001(b)(1). (4) Financial company means a company or other entity (A) that is (i) incorporated or organized under the laws of the United States or any State, territory, or possession of the United States, the District of Columbia, Commonwealth of Puerto Rico, Commonwealth of Northern Mariana Islands, Guam, American Samoa, or the United States Virgin Islands; (ii) a Federal or State branch or agency of a foreign bank as such terms are defined in the International Banking Act of 1978 (12 U.S.C. 3101(b)); or
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DISCUSSION DRAFT 10/27/2009
(iii) a United States affiliate or other United States operating entity of a company that is incorporated or organized in a country other than the United States; and (B) that is, in whole or in part, directly or indirectly, engaged in financial activities. (5) Identified financial holding company means a financial company that the Council has identified for heightened prudential standards under subtitle B of this Act, unless such financial company is required to establish an intermediate holding company under section 6 of the Bank Holding Company Act, in which case the identified financial holding company is such section 6 holding company through which the financial company is required to conduct its financial activities. (6) Primary financial regulatory agency means the following (A) The Office of the Comptroller of the Currency, with respect to any national bank, any Federal branch or Federal agency of a foreign bank, and, after the date on which the functions of the Office of Thrift Supervision are transferred under subtitle C, a Federal savings association. (B) The Board, with respect to (i) a State member bank; (ii) any bank holding company and any subsidiary of such company (as such terms are defined in the Bank Holding Company Act), other than a subsidiary that is described in any other subparagraph of this paragraph to the extent that the subsidiary is engaged in an activity described in such subparagraph;
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(iii) any identified financial holding company and any subsidiary (as such term is defined in the Bank Holding Company Act) of such company, other than a subsidiary that is described in any other subparagraph of this paragraph to the extent that the subsidiary is engaged in an activity described in such subparagraph; (iv) after the date on which the functions of the Office of Thrift Supervision are transferred under subtitle C, any savings and loan holding company (as defined in section 10(a)(1)(D) of the Home Owners Loan Act) and any subsidiary (as such term is defined in the Bank Holding Company Act) of a such company, other than a subsidiary that is described in any other subparagraph of this paragraph, to the extent that the subsidiary is engaged in an activity described in such subparagraph; (v) any organization organized and operated under section 25 or 25A of the Federal Reserve Act (12 U.S.C. 601 et seq. or 611 et seq.); and (vi) any foreign bank or company that is treated as a bank holding company under subsection (a) of section 8 of the International Banking Act of 1978 applies and any subsidiary (other than a bank or other subsidiary that is described in any other subparagraph of this paragraph) of any such foreign bank or company. (C) The Federal Deposit Insurance Corporation, with respect to a State nonmember bank, any insured State branch of a foreign bank (as such terms are defined in section 3 of the Federal Deposit Insurance Act), and, after the date on which the
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functions of the Office of Thrift Supervision are transferred under subtitle C, any State savings association. (D) 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.). (E) The Securities and Exchange Commission, with respect to (i) any broker or dealer registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.); (ii) any investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.); (iii) any investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) with respect to the investment advisory activities of such company and activities incidental to such advisory activities; and (v) any clearing agency registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.). (F) The Commodity Futures Trading Commission, with respect to (i) any futures commission merchant, any commodity trading adviser, and 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 commodities activities of such entity and activities incidental to such commodities activities; and
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(G) The Federal Housing Finance Agency with respect to the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, and the Federal home loan banks. (H) The State insurance authority of the state in which an insurance company is domiciled, with respect to the insurance activities and activities incidental to such insurance activities of an insurance company that is subject to supervision by the State insurance authority under State insurance law. (I) The Office of Thrift Supervision, with respect to any Federal savings association, State savings association, or savings and loan holding company, until the date on which the functions of the Office of Thrift Supervision are transferred under subtitle C. (7) TERMS DEFINED IN OTHER LAWS. (A) AFFILIATE.The term affiliate has the meaning given such term in section 2(k) of the Bank Holding Company Act of 1956. (B) STATE MEMBER BANK, STATE NONMEMBER BANK.The terms State member bank and State nonmember bank have the same meanings as in subsections (d)(2) and (e)(2), respectively, of section 3 of the Federal Deposit Insurance Act.
SUBTITLE A THE FINANCIAL SERVICES OVERSIGHT COUNCIL

SEC. 1001. FINANCIAL SERVICES OVERSIGHT COUNCIL ESTABLISHED. (a) ESTABLISHMENT.Immediately upon enactment of this title, there is established a Financial Services Oversight Council. (b) MEMBERSHIP. The Council shall consist of the following:
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(1) VOTING MEMBERS.Voting members, who shall each have one vote on the Council, as follows: (A) The Secretary of the Treasury, who shall serve as the Chairman of the Council; (B) The Chairman of the Board of Governors of the Federal Reserve System; (C) The Comptroller of the Currency. (D) The Director of the Office of Thrift Supervision, until the functions of the Director of the Office of Thrift Supervision are transferred to pursuant to subtitle C of this title; (E) The Chairman of the Securities and Exchange Commission. (F) The Chairman of the Commodity Futures Trading Commission. (G) The Chairperson of the Federal Deposit Insurance Corporation. (H) The Director of the Federal Housing Finance Agency. (I) The Chairman of the National Credit Union Administration; and (2) NONVOTING MEMBERS. Nonvoting members, who shall serve in an advisory capacity: (A) A state insurance commissioner, to be designated by a selection process determined by the state insurance commissioners, provided that the term for which a state insurance commissioner may serve shall last no more than the 2year period beginning on the date that the commissioner is selected. (B) A state banking supervisor, to be designated by a selection process determined by the state bank supervisors, provided that the term for which a state
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banking supervisor may serve shall last no more than the 2-year period beginning on the date that the supervisor is selected. (c) DUTIES. The Council shall have the following duties (1) to advise the Congress on financial regulation and make recommendations that will enhance the integrity, efficiency, orderliness, competitiveness, and stability of the United States financial markets; (2) to monitor the financial services marketplace to identify potential threats to the stability of the United States financial system; (3) to identify financial companies and financial activities that should be subject to heightened prudential standards in order to promote financial stability and mitigate systemic risk in accordance with sections subtitles B and E of this title; (4) to issue formal recommendations that a Council member agency adopt heightened prudential standards for firms it regulates to mitigate systemic risk in accordance with subtitle B of this title; (5) to facilitate information sharing and coordination among the members of the Council regarding financial services policy development, rulemakings, examinations, reporting requirements, and enforcement actions; (6) to provide a forum for discussion and analysis of emerging market developments and financial regulatory issues among its members; and (7) at the request of an agency that is a Council member, to resolve a jurisdictional or regulatory dispute between that agency and another agency that is a Council member in accordance with section 1002 of this title. SEC. 1002. RESOLUTION OF DISPUTES AMONG FEDERAL FINANCIAL
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(a) REQUEST FOR DISPUTE RESOLUTION. The Council shall resolve a dispute among 2 or more Federal financial regulatory agencies if (1) a Federal financial regulatory agency has a dispute with another Federal financial regulatory agency about the agencies respective jurisdiction over a particular financial company or financial activity or product (excluding matters for which another dispute mechanism specifically has been provided under Federal law); (2) the disputing agencies cannot, after a demonstrated good faith effort, resolve the dispute among themselves; (3) any of the Federal financial regulatory agencies involved in the dispute (A) provides all other disputants prior notice of its intent to request dispute resolution by the Council; and (B) requests in writing, no earlier than 14 days after providing the notice described in paragraph (A), that the Council resolve the dispute. (b) COUNCIL DECISION. The Council shall decide the dispute (1) within a reasonable time after receiving the dispute resolution request; (2) after consideration of relevant information provided by each party to the
(3) by agreeing with 1 of the disputants regarding the entirety of the matter or by determining a compromise position. (c) FORM AND BINDING EFFECT. A Council decision under this section shall be in writing and include an explanation and shall be binding on all Federal financial regulatory agencies that are parties to the dispute.
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SEC. 1003. TECHNICAL AND PROFESSIONAL ADVISORY COMMITTEES. The Council is authorized to appoint (a) subsidiary working groups composed of Council members and their staff, Council staff, or a combination; and (b) such temporary special advisory, technical, or professional committees as may be useful in carrying out its functions, which may be composed of Council members and their staff, other persons, or a combination. SEC. 1004. FINANCIAL SERVICES OVERSIGHT COUNCIL MEETINGS AND COUNCIL GOVERNANCE. (a) MEETINGS. The Council shall meet as frequently as the Chairman deems necessary, but not less than quarterly. (b) VOTING . Unless otherwise provided, the Council shall make all decisions the Council is required or authorized to make by a majority of the total voting membership of the Council under section 1001(b)(1). SEC. 1005. COUNCIL STAFF AND FUNDING. (a) DEPARTMENT OF THE TREASURY.The Secretary of the Treasury shall (1) detail permanent staff from the Department of the Treasury to provide the Council (and any temporary special advisory, technical, or professional committees appointed by the Council) with professional and expert support; and (2) provide such other services and facilities necessary for the performance of the Councils functions and fulfillment of the duties and mission of the Council. (b) OTHER DEPARTMENTS AND AGENCIES.In addition to the assistance prescribed in subsection (a), departments and agencies of the United States may, with the approval of the
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(1) detail department or agency staff on a temporary basis to provide additional support to the Council (and any special advisory, technical, or professional committees appointed by the Council); and (2) provide such services, and facilities as the other departments or agencies may determine advisable. (c) STAFF STATUS; COUNCIL FUNDING. (1) STATUS. Staff detailed to the Council by the Secretary of the Treasury and other United States departments or agencies shall (A) report to and be subject to oversight by the Council during their assignment to the Council; and (B) be compensated by the department of agency from which the stall was detailed. (2) FUNDING.The administrative expense of the Council shall be paid by the departments and agencies represented by voting members of the Council on an equal basis. SEC. 1006. REPORTS TO CONGRESS. (a) IN GENERAL. The Council shall submit an annual report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate that (1) describes significant financial market developments and potential emerging threats to the stability of the financial system; (2) recommends actions that will improve financial stability;
11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 law. E; and
(3) describes any company or activity identifications made under subtitles B and
(4) describes any dispute resolutions undertaken under section 1002 and the result of such resolutions. (b) CONFIDENTIALITY. The Committees of the Congress receiving the Councils report shall maintain the confidentiality of the identity of companies described in accordance with paragraph (a)(3) and the information relating to dispute resolutions described in accordance with paragraph (a)(4). SEC. 1007. APPLICABILITY OF CERTAIN FEDERAL LAWS. (a) The Federal Advisory Committee Act shall not apply to the Financial Services Oversight Council, or any special advisory, technical, or professional committees 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). (b) The Council shall not be deemed an agency for purposes of any State or Federal
SUBTITLE B PRUDENTIAL REGULATION OF COMPANIES AND ACTIVITIES FOR FINANCIAL STABILITY PURPOSES
SEC. 1101. COUNCIL AND BOARD AUTHORITY TO OBTAIN INFORMATION. (a) IN GENERAL.The Council and the Board are authorized to receive, and may request the production of, any data or information from members of the Council, as necessary (1) to monitor the financial services marketplace to identify potential threats to the stability of the United States financial system; or
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(2) to otherwise carry out any of the provisions of this title, including to ascertain a primary financial regulatory agencys implementation of recommended prudential standards under this subtitle. (b) SUBMISSION BY COUNCIL MEMBERS.Notwithstanding any provision of law, any voting or nonvoting member of the Council is authorized to provide information to the Council, and the members of the Council shall maintain the confidentiality of such information. (c) FINANCIAL DATA COLLECTION . (1) IN GENERAL. The Council or the Board may require the submission of periodic and other reports from any financial company solely for the purpose of assessing the extent to which a financial activity or financial market in which the financial company participates, or the company itself, poses a threat to financial stability. (2) MITIGATION OF REPORT BURDEN.Before requiring the submission of reports from financial companies that are regulated by the Federal financial regulatory agencies, the Council or the Board shall coordinate with such agencies and shall, whenever possible, rely on information already being collected by such agencies. (d) CONSULTATION WITH AGENCIES AND ENTITIES.The Council or the Board, as appropriate, may consult with Federal and State agencies and other entities to carry out any of the provisions of this subtitle. SEC. 1102. COUNCIL PRUDENTIAL REGULATION RECOMMENDATIONS TO PRIMARY REGULATORS (a) IN GENERAL.The Council is authorized to issue formal recommendations, publicly or privately, that a Federal financial regulatory agency adopt heightened prudential standards for firms it regulates to mitigate systemic risk.
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(b) AGENCY AUTHORITY TO IMPLEMENT STANDARDS.A Federal financial regulatory agency specifically is authorized to impose, require reports regarding, examine for compliance with, and enforce heightened prudential standards and safeguards for the firms it regulates to mitigate systemic risk. This authority is in addition to and does not limit any other authority of the Federal financial regulatory agencies. Compliance by an entity with actions taken by a Federal financial regulatory agency under this section shall be enforceable in accordance with the statutes governing the respective Federal financial regulatory agencys jurisdiction over the entity as if the agency action were taken under those statutes. (c) AGENCY NOTICE TO COUNCIL.A Federal financial regulatory agency shall, within 60 days of receiving a Council recommendation under this section, notify the Council in writing regarding (1) the actions the Federal financial regulatory agency has taken in response to the Councils recommendation; or (2) the reason the Federal financial regulatory agency has failed to respond to the Councils request. SEC. 1103. IDENTIFICATION OF FINANCIAL COMPANIES FOR HEIGHTENED PRUDENTIAL STANDARDS FOR FINANCIAL STABILITY PURPOSES. (a) IN GENERAL. The Council may subject a financial company to heightened prudential standards under section 1104 if the Council determines that (1) material financial distress at the company could pose a threat to financial stability or the economy; or (2) the nature, scope, or mix of the companys activities could pose a threat to financial stability or the economy.
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(b) CRITERIA. In making a determination under subsection (a), the Council shall consider the following criteria: (1) The amount and nature of the companys financial assets. (2) The amount and nature of the companys liabilities, including the degree of reliance on short-term funding. (3) The extent and nature of the companys off-balance sheet exposures. (4) The extent and nature of the companys transactions and relationships with other financial companies. (5) The companys importance as a source of credit for households, businesses, and State and local governments and as a source of liquidity for the financial system. (6) The nature, scope, and mix of the companys activities. (7) Any other factors that the Council deems appropriate. (c) PERIODIC REVIEW AND RESCISSION OF FINDINGS . (1) SUBMISSION OF ASSESSMENT.The Board shall periodically submit a report to the Council containing an assessment of whether each company subjected to heightened prudential standards should continue to be subject to such standards. (2) REVIEW AND RESCISSION.The Council shall (A) review the assessment submitted pursuant to paragraph (1) and any information or recommendation submitted by members of the Council regarding whether an identified financial holding company continues to merit heightened prudential standards; and (B) rescind the action subjecting a company to heightened prudential supervision if the Council determines that the company no longer meets the
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conditions for identification in subsections (a) and (b). (d) PROCEDURE FOR IDENTIFYING OR RESCINDING IDENTIFICATION OF A COMPANY. (1) COUNCIL AND BOARD COORDINATION. The Council shall inform the Board if the Council is considering whether to identify or cease to identify a company under this section. (2) NOTICE AND OPPORTUNITY FOR CONSIDERATION OF WRITTEN MATERIALS. (A) IN GENERAL. The Board shall, in an executive capacity on behalf of the Council, inform a financial company that the Council is considering whether to identify or cease to identify such company under this section, including an explanation of the basis of the Councils consideration, and shall provide such financial company 30 days to submit written materials to inform the Councils decision. The Council shall make its decision, and the Board shall notify the company of the Councils decision by order, within 60 days of the due date for such written materials (B) EMERGENCY EXCEPTION TO PROCESS REQUIREMENTS.The Council may waive or modify the requirements of subparagraph (A) with respect to a company if the Council determines that such waiver or modification is necessary or appropriate to prevent or mitigate threats posed by the company to financial stability. The Board shall, in an executive capacity on behalf of the Council, provide notice of such waiver or modification to the financial company concerned as soon as practicable, which shall be no later than 24 hours after the waiver or modification. (3) CONSULTATION. If a financial company being considered for identification
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under this section is, or has one or more subsidiaries that are, subject to regulation by a Federal financial regulatory agency, as such subsidiaries are described in section 2(6) of this subtitle, the Council shall consult with the relevant Federal financial regulatory agency for each such subsidiary before making any decision under this section. (4) EMERGENCY EXCEPTION TO MAJORITY VOTE OF COUNCIL REQUIREMENT. If each of the Secretary of the Treasury, the Board, and the Federal Deposit Insurance Corporation determines that a financial company must be subjected to heightened prudential standards under this section immediately to prevent destabilization of the financial system or economy, the Secretary, the Board, and the Corporation may identify a financial company under this section upon certification by the President of the United States. (e) EFFECT OF IDENTIFICATION. (1) APPLICATION OF THE BANK HOLDING COMPANY ACT. A financial company that is not a bank holding company as defined in the Bank Holding Company Act at the time of its identification under this section, shall (A) if such company conducts at the time of its identification only activities that are determined to be financial in nature or incidental thereto under section 4(k) of the Bank Holding Company Act, be treated as a bank holding company that has elected to be a financial holding company for purposes of the Bank Holding Company Act of 1956, as amended, the Federal Deposit Insurance Act, as amended, and all other Federal laws and regulations governing bank holding companies and financial holding companies; or
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(B) if such company conducts at the time of its identification 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, be required to establish and conduct all its activities that are determined to be financial in nature or incidental thereto under section 4(k) of the Bank Holding Company Act in an intermediate holding company established under section 6 of the Bank Holding Company Act, which intermediate holding company shall be the identified financial holding company for purposes of this subtitle. (2) EXEMPTIVE AUTHORITY. Notwithstanding any provision of the Bank Holding Company Act, the Board may, if it determines such action is necessary to ensure appropriate heightened prudential supervision, issue such exemptions from that Act as may be necessary with regard to identified financial holding companies that do not control an insured depository institution. (3) HEIGHTENED PRUDENTIAL REGULATION. The Board shall apply heightened prudential standards to each identified financial holding company subject to this title. (f) NO PUBLIC LIST OF IDENTIFIED COMPANIES. The Council and the Board may not publicly release a list of companies identified under this section. SEC. 1104. REGULATION OF IDENTIFIED FINANCIAL HOLDING COMPANIES FOR FINANCIAL STABILITY PURPOSES (a) PRUDENTIAL STANDARDS FOR IDENTIFIED FINANCIAL HOLDING COMPANIES. (1) IN GENERAL. To mitigate risks to financial stability and the economy posed by an identified financial holding company, the Board shall impose heightened prudential standards on such company. Such standards shall be designed to maximize financial
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stability taking costs to long-term financial and economic growth into account, be heightened when compared to the standards that otherwise would apply to financial holding companies that are not identified pursuant to this subtitle (including by addressing additional or different types of risks than otherwise applicable standards), and reflect the potential risk posed to financial stability by the identified financial holding company. (2) STANDARDS. (A) REQUIRED STANDARDS. The heightened standards imposed by the Board under this section shall include (i) risk-based capital requirements; (ii) leverage limits; (iii) liquidity requirements; (iv) concentration requirements (as specified in subsection (c)); (v) prompt corrective action requirements (as specified in subsection (d)); (vi) resolution plan requirements (as specified in subsection (e)); and (vii) overall risk management requirements. (B) ADDITIONAL STANDARDS. The heightened standards imposed by the Board under this section also may include any other prudential standards that the Board deems advisable, including taking actions to mitigate systemic risk (as specified in paragraph (5). (3) APPLICATION OF REQUIRED STANDARDS. In imposing prudential standards
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under this subsection, the Board may differentiate among identified financial holding companies on an individual basis or by category, taking into consideration their capital structure, risk, complexity, financial activities, the financial activities of their subsidiaries, and any other factors that the Board deems appropriate. (4) WELL CAPITALIZED AND WELL MANAGED.An identified financial holding company shall at all times after it files its registration statement as an identified financial holding company be well capitalized and well managed as defined by the Board. (5) MITIGATION OF SYSTEMIC RISK.If the Board determines, after notice and an opportunity for hearing, that the size of an identified financial holding company or the scope or nature of activities directly or indirectly conducted by an identified financial holding company poses a threat to the safety and soundness of such company or to the financial stability of the United States, the Board may require the identified financial holding company to sell or otherwise transfer assets or off-balance sheet items to unaffiliated firms, to terminate one or more activities, or to impose conditions on the manner in which the identified financial holding company conducts one or more activities. (6) APPLICATION TO FOREIGN FINANCIAL COMPANIES. The Board shall prescribe regulations regarding the application of heightened prudential standards to financial companies that are organized or incorporated in a country other than the United States, and that own or control a Federal or State branch, subsidiary, or operating entity that is an identified financial holding company, giving due regard to the principle of national treatment and equality of competitive opportunity. (b) PRUDENTIAL STANDARDS AT FUNCTIONALLY REGULATED SUBSIDIARIES AND
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(1) BOARD AUTHORITY TO RECOMMEND STANDARDS.With respect to a functionally regulated subsidiary (as such term is defined in section 5 of the Bank Holding Company Act) or a subsidiary depository institution of an identified financial holding company, the Board may recommend that the relevant primary financial regulatory agency for such functionally regulated subsidiary or subsidiary depository institution prescribe heightened prudential standards on such functionally regulated subsidiary or subsidiary depository institution. Any standards recommended by the Board under this section shall be of the same type as those described in subsection (a)(2) that the Board is required or authorized to impose directly on the identified financial holding company. (2) AGENCY AUTHORITY TO IMPLEMENT HEIGHTENED STANDARDS AND SAFEGUARDS. Each primary financial regulatory agency that receives a Board recommendation under paragraph (1) is authorized to impose, require reports regarding, examine for compliance with, and enforce standards under this subsection with respect to the entities described in section 2(6) for which it is the primary financial regulatory agency. This authority is in addition to and does not limit any other authority of the primary financial regulatory agencies. 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 agencys jurisdiction over the entity as if the agency action were taken under those statutes. (3) IMPOSITION OF STANDARDS.Standards imposed by a primary financial regulatory agency under this subsection shall be the standards recommended by the
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Board or any other similar standards that the Board deems acceptable after consultation between the Board and the primary financial regulatory agency. (4) FAILURE TO ADOPT STANDARDS; NOTICE
TO COUNCIL AND BOARD.
If a
primary financial regulatory agency fails to implement the prudential standards recommended by the Board or other similar standards that are acceptable to the Board within 60 days of the Boards recommendation, the agency shall justify in writing the failure of such agency to act to the Council and the Board within that same time period. (5) BACKUP AUTHORITY OF THE BOARD. (A) IN GENERAL. When notified that a primary financial regulatory agency has failed to impose the heightened prudential standards recommended by the Board for financial stability purposes under this subsection, the Board is authorized to directly impose, require reports regarding, examine for compliance with, and enforce such heightened prudential standards under this subsection with respect to a functionally regulated subsidiary for which the primary financial regulatory agency ordinarily is responsible. (B) LIMITATIONS ON BOARD BACKUP AUTHORITY. The Boards standard-imposition, report-related, examination, and enforcement activities under this subsection shall be limited to the heightened prudential standards imposed under this subsection. (c) CONCENTRATION LIMITS FOR IDENTIFIED FINANCIAL HOLDING COMPANIES. (1) STANDARDS.In order to limit the risks that the failure of any company could pose to an identified financial holding company and to the stability of the United States
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financial system, the Board, by regulation, shall prescribe standards that limit the risks posed by the exposure of an identified financial holding company to any other company. (2) LIMITATION ON CREDIT EXPOSURE.The regulations prescribed by the Board shall prohibit each identified financial holding company from having credit exposure to any unaffiliated company that exceeds 25% of the identified financial holding companys capital stock and surplus or such lower amount as the Board may determine by regulation to be necessary to mitigate risks to financial stability. (3) CREDIT EXPOSURE.For purposes of this subsection, an identified financial holding companys 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 agreement with the company; (C) all securities borrowing and lending transactions with the company to the extent that such transactions create credit exposure of the identified financial holding company to the company; (D) all guarantees, acceptances, or letters of credit (including endorsement or standby letters of credit) issued on behalf of the company; (E) all purchases of or investment in securities issued by the company; (F) counterparty credit exposure to the company in connection with a derivative transaction between the identified financial holding company and the company; and
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(G) any other similar transactions that the Board by regulation determines to be a credit exposure for purposes of this section. (4) ATTRIBUTION RULE.For purposes of this subsection, any transaction by an identified financial holding company with any person is deemed 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 may issue such regulations and orders, including definitions consistent with this subsection, as may be necessary to administer and carry out the purpose of this subsection. (6) EXEMPTIONS.The Board may, by regulation or order, exempt transactions, in whole or in part, from the definition of credit exposure if it finds that the exemption is in the public interest and consistent with the purpose of this subsection. (7) TRANSITION PERIOD.This subsection and any regulations and orders of the Board under the authority of this subsection shall not be effective until three years from the effective date of this subsection. The Board can extend the effective date for up to two additional years to promote financial stability. (d) PROMPT CORRECTIVE ACTION FOR IDENTIFIED
FINANCIAL HOLDING COMPANIES.
(1) PROMPT CORRECTIVE ACTION REQUIRED.The Board shall take prompt corrective action to resolve the problems of identified financial holding companies. (2) DEFINITIONS.For purposes of this section (A) CAPITAL CATEGORIES. (i) WELL CAPITALIZED.An identified financial holding company is well capitalized if it exceeds the required minimum level for each
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(ii) UNDERCAPITALIZED.An identified financial holding company is undercapitalized if it fails to meet the required minimum level for any relevant capital measure. (iii) SIGNIFICANTLY UNDERCAPITALIZED.An identified financial holding company is significantly undercapitalized if it is significantly below the required minimum level for any relevant capital measure. (iv) CRITICALLY UNDERCAPITALIZED.An identified financial holding company is critically undercapitalized if it fails to meet any level specified in paragraph (4)(C)(i). (3) OTHER DEFINITIONS. (A) AVERAGE.The average of an accounting item (such as total assets or tangible equity) during a given period means the sum of that item at the close of business on each business day during that period divided by the total number of business days in that period. (B) CAPITAL DISTRIBUTION. The term capital distribution means (i) a distribution of cash or other property by an identified financial holding company to its owners made on account of that ownership, but not including any dividend consisting only of shares of the identified financial holding company or rights to purchase such shares; (ii) a payment by an identified financial holding company to repurchase, redeem, retire, or otherwise acquire any of its shares or other ownership interests, including any extension of credit to finance any
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persons acquisition of those shares or interests; or (iii) a transaction that the Board determines, by order or regulation, to be in substance a distribution of capital to the owners of the identified financial holding company. (C) CAPITAL RESTORATION PLAN.The term capital restoration plan means a plan submitted under paragraph (6)(B). (D) COMPENSATIONThe term compensation includes any payment of money or provision of any other thing of value in consideration of employment. (E) RELEVANT CAPITAL MEASURE.The term relevant capital measure means the measures described in paragraph (4). (F) REQUIRED MINIMUM LEVEL.The term required minimum level means, with respect to each relevant capital measure, the minimum acceptable capital level specified by the Board by regulation. (G) SENIOR EXECUTIVE OFFICER. The term senior executive officer has the same meaning as the term executive officer in section 22(h) of the Federal Reserve Act (12 U.S.C. 375b). (4) CAPITAL STANDARDS. (A) RELEVANT CAPITAL MEASURES. (i) IN GENERAL.Except as provided in clause (ii)(II), the capital standards prescribed by the Board under subsection 6(c) of the Bank Holding Company Act of 1956 (12 U.S.C. 1845(c)) shall include (I) a leverage limit; and (II) a risk-based capital requirement.
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(ii) OTHER CAPITAL MEASURES.The Board may by regulation (I) establish any additional relevant capital measures to carry out this section; or (II) rescind any relevant capital measure required under subparagraph (A) upon determining that the measure is no longer an appropriate means for carrying out this section. (B) CAPITAL CATEGORIES GENERALLY.The Board shall, by regulation, specify for each relevant capital measure the levels at which an identified financial holding company is well capitalized, undercapitalized, and significantly undercapitalized. (C) CRITICAL CAPITAL. (i) BOARD TO SPECIFY LEVEL. (I) LEVERAGE LIMIT.The Board shall, by regulation, specify the ratio of tangible equity to total assets at which an identified financial holding company is critically undercapitalized. (II) OTHER RELEVANT CAPITAL MEASURES.The Board may, by regulation, specify for 1 or more other relevant capital measures, the level at which an identified financial holding company is critically undercapitalized. (ii) LEVERAGE LIMIT RANGE. The level specified under clause (i)(I) shall require tangible equity in an amount (I) not less than 2 percent of total assets; and (II) except as provided in subclause (I), not more than 65
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percent of the required minimum level of capital under the leverage limit. (5) CAPITAL DISTRIBUTIONS RESTRICTED. (A) IN GENERAL.An identified financial holding company shall make no capital distribution if, after making the distribution, the identified financial holding company would be undercapitalized. (B) EXCEPTION. Notwithstanding subparagraph (A), the Board may permit an identified financial holding company to repurchase, redeem, retire, or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement, or other acquisition (i) is made in connection with the issuance of additional shares or obligations of the identified financial holding company in at least an equivalent amount; and (ii) will reduce the identified financial holding company's financial obligations or otherwise improve the identified financial holding company's financial condition. (6) PROVISIONS APPLICABLE TO UNDERCAPITALIZED IDENTIFIED FINANCIAL COMPANIES.
(A) MONITORING REQUIRED.The Board shall (i) closely monitor the condition of any undercapitalized identified financial holding company; (ii) closely monitor compliance by any undercapitalized identified financial holding company with capital restoration plans, restrictions, and
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requirements imposed under this section; and (iii) periodically review the plan, restrictions, and requirements applicable to any undercapitalized identified financial holding company to determine whether the plan, restrictions, and requirements are effective. (B) CAPITAL RESTORATION PLAN REQUIRED. (i) IN GENERAL.Any undercapitalized identified financial holding company shall submit an acceptable capital restoration plan to the Board within the time allowed by the Board under clause (iv). (ii) CONTENTS OF PLAN.The capital restoration plan shall (I) specify (AA) the steps the identified financial holding company will take to become well capitalized; (BB) the levels of capital to be attained by the identified financial holding company during each year in which the plan will be in effect; (CC) how the identified financial holding company will comply with the restrictions or requirements then in effect under this section; and (DD) the types and levels of activities in which the identified financial holding company will engage; and (II) contain such other information that the Board may require. (iii) CRITERIA FOR ACCEPTING PLAN.The Board shall not accept a
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capital restoration plan unless it determines that the plan (I) complies with subparagraph (B); (II) is based on realistic assumptions, and is likely to succeed in restoring the identified financial holding company's capital; and (III) would not appreciably increase the risk (including credit risk, interest-rate risk, and other types of risk) to which the identified financial holding company is exposed. (iv) DEADLINES FOR SUBMISSION AND REVIEW OF PLANS.The Board shall, by regulation, establish deadlines that (I) provide identified financial holding companies with reasonable time to submit capital restoration plans, and generally require an identified financial holding company to submit a plan not later than 45 days after it becomes undercapitalized; and (II) require the Board to act on capital restoration plans expeditiously, and generally not later than 60 days after the plan is submitted. (C) ASSET GROWTH RESTRICTED.An undercapitalized identified financial holding company shall not permit its average total assets during any calendar quarter to exceed its average total assets during the preceding calendar quarter unless (i) the Board has accepted the identified financial holding company's capital restoration plan;
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(ii) any increase in total assets is consistent with the plan; and (iii) the identified financial holding company's ratio of tangible equity to total assets increases during the calendar quarter at a rate sufficient to enable it to become well capitalized within a reasonable time. (D) PRIOR APPROVAL REQUIRED FOR ACQUISITIONS AND NEW LINES OF
BUSINESS.An
undercapitalized identified financial holding company shall not,
directly or indirectly, acquire any interest in any company or insured depository institution, or engage in any new line of business, unless (i) the Board has accepted the identified financial holding company's capital restoration plan, the identified financial holding company is implementing the plan, and the Board determines that the proposed action is consistent with and will further the achievement of the plan; (ii) the Board determines that the specific proposed action is appropriate; or (iii) the Board has exempted the identified financial holding company from the requirements of this paragraph with respect to the class of acquisitions that includes the proposed action. (E) DISCRETIONARY SAFEGUARDS. The Board may, with respect to any undercapitalized identified financial holding company, take actions described in any subparagraph of paragraph (7)(B) if the Board determines that those actions are necessary. (7) PROVISIONS APPLICABLE TO SIGNIFICANTLY UNDERCAPITALIZED IDENTIFIED
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FINANCIAL HOLDING COMPANIES AND UNDERCAPITALIZED IDENTIFIED FINANCIAL HOLDING COMPANIES THAT FAIL TO SUBMIT AND IMPLEMENT CAPITAL RESTORATION PLANS. (A) IN GENERAL.This paragraph shall apply with respect to any identified financial holding company that (i) is significantly undercapitalized; or (ii) is undercapitalized and (I) fails to submit an acceptable capital restoration plan within the time allowed by the Board under subsection (e)(2)(D); or (II) fails in any material respect to implement a capital restoration plan accepted by the Board. (B) SPECIFIC ACTIONS AUTHORIZED.The Board shall carry out this paragraph by taking 1 or more of the following actions (i) REQUIRING RECAPITALIZATION.Doing one or more of the following (I) Requiring the identified financial holding company to sell enough shares or obligations of the identified financial holding company so that the identified financial holding company will be well capitalized after the sale. (II) Further requiring that instruments sold under clause (I) be voting shares. (III) Requiring the identified financial holding company to
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be acquired by or combine with another company. (ii) RESTRICTING TRANSACTIONS WITH AFFILIATES. (I) Requiring the identified financial holding company to comply with section 23A of the Federal Reserve Act (12 U.S.C. 371c), as if it were a member bank. (II) Further restricting the identified financial holding company's transactions with affiliates and insiders. (iii) RESTRICTING ASSET GROWTH.Restricting the identified financial holding companys asset growth more stringently than subsection (6)(C), or requiring the identified financial holding company to reduce its total assets. (iv) RESTRICTING ACTIVITIES.Requiring the identified financial holding company or any of its subsidiaries to alter, reduce, or terminate any activity that the Board determines poses excessive risk to the identified financial holding company. (v) IMPROVING MANAGEMENT.Doing one or more of the following (I) New election of directors.Ordering a new election for the identified financial holding company's board of directors. (II) Dismissing directors or senior executive officers. Requiring the identified financial holding company to dismiss from office any director or senior executive officer who had held office for more than 180 days immediately before the identified financial
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holding company became undercapitalized. Dismissal under this clause shall not be construed to be a removal under section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818). (III) Employing qualified senior executive officers. Requiring the identified financial holding company to employ qualified senior executive officers (who, if the Board so specifies, shall be subject to approval by the Board). (vi) REQUIRING DIVESTITURE.Requiring the identified financial holding company to divest itself of or liquidate any subsidiary if the Board determines that the subsidiary is in danger of becoming insolvent, poses a significant risk to the identified financial holding company, or is likely to cause a significant dissipation of the identified financial holding company's assets or earnings. (vii) REQUIRING OTHER ACTION.Requiring the Identified financial company to take any other action that the Board determines will better carry out the purpose of this section than any of the actions described in this paragraph. (C) PRESUMPTION IN FAVOR OF CERTAIN ACTIONS.In complying with subparagraph (B), the Board shall take the following actions, unless the Board determines that the actions would not be appropriate (i) The action described in subclause (I) or (II) of subparagraph (B)(i) (relating to requiring the sale of shares or obligations, or requiring the identified financial holding company to be acquired by or combine
34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 with another company).
(i) The action described in paragraph (B)(ii)(I) (relating to restricting transactions with affiliates). (D) SENIOR EXECUTIVE OFFICERS COMPENSATION RESTRICTED. (i) IN GENERAL.The identified financial holding company shall not do any of the following without the prior written approval of the Board (I) Pay any bonus to any senior executive officer. (II) Provide compensation to any senior executive officer at a rate exceeding that officer's average rate of compensation (excluding bonuses, stock options, and profit-sharing) during the 12 calendar months preceding the calendar month in which the identified financial holding company became undercapitalized. (ii) FAILING TO SUBMIT PLAN.The Board shall not grant any approval under clause (i) with respect to an identified financial holding company that has failed to submit an acceptable capital restoration plan. (E) CONSULTATION WITH OTHER REGULATORS.Before the Board makes a determination under subparagraph (B)(vi) with respect to a subsidiary that is a broker, dealer, government securities broker, government securities dealer, investment company, or investment adviser, the Board shall consult with the Securities and Exchange Commission and, in the case of any other subsidiary which is subject to any financial responsibility or capital requirement, any other appropriate regulator of such subsidiary with respect to the proposed
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determination of the Board and actions pursuant to such determination. (8) MORE STRINGENT TREATMENT BASED ON OTHER SUPERVISORY CRITERIA. (A) IN GENERAL.If the Board determines (after notice and an opportunity for hearing) that an identified financial holding company is in an unsafe or unsound condition or, pursuant to section 8(b)(8) of the Federal Deposit Insurance Act (12 U.S.C. 1818(b)(8)), deems the identified financial holding company to be engaging in an unsafe or unsound practice, the Board may (i) if the identified financial holding company is well capitalized, require the identified financial holding company to comply with one or more provisions of paragraphs (5) and (6), as if the institution were undercapitalized; or (ii) if the identified financial holding company is undercapitalized, take any one or more actions authorized under paragraph (7)(B) as if the identified financial holding company were significantly undercapitalized. (B) CONTENTS OF PLAN.A plan that may be required pursuant to subparagraph (A)(i) shall specify the steps that the identified financial holding company will take to correct the unsafe or unsound condition or practice. (9) MANDATORY BANKRUPTCY PETITION FOR CRITICALLY UNDERCAPITALIZED IDENTIFIED FINANCIAL COMPANIES. The Board shall, not later than 90 days after an identified financial holding company becomes critically undercapitalized (A) require the identified financial holding company to file a petition for bankruptcy under section 301 of title 11, United States Code; or (B) file a petition for bankruptcy against the identified financial holding
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company under section 303 of title 11, United States Code. (10) IMPLEMENTATION.The Board shall prescribe such regulations, issue such orders, and take such other actions the Board determines to be necessary to carry out this section. (11) OTHER AUTHORITY NOT AFFECTED.This section does not limit any authority of the Board, any other Federal regulatory agency, or a State to take action in addition to (but not in derogation of) that required under this section. (12) CONSULTATION.The Board and the Secretary of the Treasury shall consult with their foreign counterparties and through appropriate multilateral organizations to reach agreement to extend comprehensive and robust prudential supervision and regulation to all highly leveraged and substantially interconnected financial companies. (13) ADMINISTRATIVE REVIEW OF DISMISSAL ORDERS. (A) TIMELY PETITION REQUIRED.A director or senior executive officer dismissed pursuant to an order under paragraph (7)(B)(v)(II) may obtain review of that order by filing a written petition for reinstatement with the Board not later than 10 days after receiving notice of the dismissal. (B) PROCEDURE. (i) HEARING REQUIRED.The Board shall give the petitioner an opportunity to (I) submit written materials in support of the petition; and (II) appear, personally or through counsel, before 1 or more members of the Board or designated employees of the Board. (ii) DEADLINE FOR HEARING.The Board shall
37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 (e) REPORTS
(I) schedule the hearing referred to in clause (i)(II) promptly after the petition is filed; and (II) hold the hearing not later than 30 days after the petition is filed, unless the petitioner requests that the hearing be held at a later time. (iii) DEADLINE FOR DECISION.Not later than 60 days after the date of the hearing, the Board shall (I) by order, grant or deny the petition; (II) if the order is adverse to the petitioner, set forth the basis for the order; and (III) notify the petitioner of the order. (C) STANDARD FOR REVIEW OF DISMISSAL ORDERS.The petitioner shall bear the burden of proving that the petitioner's continued employment would materially strengthen the identified financial holding company's ability (i) to become well capitalized, to the extent that the order is based on the identified financial holding company's capital level or failure to submit or implement a capital restoration plan; and (ii) to correct the unsafe or unsound condition or unsafe or unsound practice, to the extent that the order is based on paragraph (8)(A)..
REGARDING RAPID AND ORDERLY RESOLUTION AND CREDIT EXPOSURE.
(1) IN GENERAL. The Board shall require each identified financial holding company to report periodically to the Board on:
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(A) its plan for rapid and orderly resolution in the event of severe financial distress; (B) the nature and extent to which the identified financial holding company has credit exposure to other significant financial companies; and (C) the nature and extent to which other significant financial companies have credit exposure to the identified financial holding company. (2) NO LIMITING EFFECT ON RECEIVER OR QUALIFIED RECEIVER.A rapid resolution plan submitted in accordance with this subsection shall not be binding on a receiver or qualified receiver appointed under subtitle G, a bankruptcy court, or any other authority that is authorized or required to resolve the identified financial holding company or any of its subsidiaries or affiliates. (f) AVOIDING DUPLICATION.The Board shall take any action the Board deems appropriate to avoid imposing duplicative requirements under this chapter for identified financial holding companies that are also bank holding companies. SEC. 1105. AUTHORITY TO FILE INVOLUNTARY PETITION FOR BANKRUPTCY. Section 303 of title 11, United States Code, is amended() in subsection (h) (a) by striking or at the end of paragraph (1);(b) by striking the period at the end of paragraph (2) and inserting ; or; and (c) by adding the following new paragraph (m) Notwithstanding subsections (a) and (b) of this section, an involuntary case may be commenced by the Board of Governors of the Federal Reserve System against an identified financial holding company as defined in section 2(t) of the Bank Holding Company Act of 1956.
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Such involuntary case may be commenced on the ground that the identified financial holding company is critically undercapitalized as defined in section 6A(b) of the Bank Holding Company Act of 1956.. SEC. 1106. IDENTIFICATION OF ACTIVITIES OR PRACTICES FOR HEIGHTENED PRUDENTIAL STANDARDS AND SAFEGUARDS FOR FINANCIAL STABILITY PURPOSES. (a) IN GENERAL. The Council may subject a financial activity or practice to heightened prudential standards and safeguards under section 1107 if the Council determines that the conduct of such activity or practice could create or increase the risk of significant liquidity, credit, or other problems spreading among financial institutions or markets and thereby threaten the stability of the financial system. (b) PERIODIC REVIEW OF ACTIVITY IDENTIFICATIONS. (1) SUBMISSION OF ASSESSMENT. The Board shall periodically submit a report to the Council containing an assessment of whether each activity or practice subjected to heightened prudential standards should continue to be subject to such standards. (2) REVIEW AND RECISSION. The Council shall (A) review the assessment submitted pursuant to paragraph (1) and any information or recommendation submitted by members of the Council regarding whether an identified financial activity continues to merit heightened prudential standards; and (B) rescind the action subjecting an activity to heightened prudential supervision if the Council determines that the activity no longer meets the criteria in subsection (a).
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(c) PROCEDURE FOR IDENTIFYING OR RESCINDING IDENTIFICATION OF AN ACTIVITY OR PRACTICE. (1) COUNCIL AND BOARD COORDINATION. The Council shall inform the Board if the Council is considering whether to identify or cease to identify an activity under this section. (2) NOTICE AND OPPORTUNITY FOR CONSIDERATION OF WRITTEN MATERIALS. (A) IN GENERAL. The Board shall, in an executive capacity on behalf of the Council, provide notice to financial companies that the Council is considering whether to identify an activity or practice for heightened prudential regulation, and shall provide a financial company engaged in such activity or practice 30 days to submit written materials to inform the Councils decision. The Council shall decide, and the Board shall provide notice of the Councils decision, within 60 days of the due date for such written materials. (B) EMERGENCY EXCEPTION.The Council may waive or modify the requirements of subparagraph (A) if the Council determines that such waiver or modification is necessary or appropriate to prevent or mitigate threats posed by an activity to financial stability. The Board shall, in an executive capacity on behalf of the Council, provide notice of such waiver or modification to financial companies as soon as practicable, which shall be no later than 24 hours after the waiver or modification. (3) FORM OF DECISION. The Board shall provide all notices required under this subsection by posting a notice on the Boards web site and publishing a notice in the Federal Register.
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(e) EFFECT OF IDENTIFICATION. The Board shall, in accordance with section 1107, recommend to the appropriate primary financial regulatory agencies specific heightened prudential standards to be applied to an activity or practice that the Council or the Board identifies under this section. SEC. 1107. REGULATION OF IDENTIFIED ACTIVITIES FOR FINANCIAL STABILITY PURPOSES (a) LIMITATIONS ON IDENTIFIED FINANCIAL ACTIVITIES AND PRACTICES. (1) RECOMMENDATIONS. To mitigate the risks to United States financial stability and the United States economy posed by financial activities and practices that the Council or the Board identifies for heightened prudential scrutiny in accordance with section 1103, the Board shall recommend prudential standards to the appropriate primary financial regulatory agencies to apply to such identified activities and practices. (2) CRITERIA. The actions recommended under paragraph (1) (A) shall be designed to maximize financial stability, taking costs to long-term financial and 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 altogether. (b) IMPLEMENTATION OF RECOMMENDED STANDARDS. (1) ROLE OF PRIMARY FINANCIAL REGULATORY AGENCY. Each primary financial regulatory agency is authorized to impose, require reports regarding, examine for compliance with, and enforce standards in accordance with this section with respect to
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those entities described in section 2(6) for which it is the primary financial regulatory agency. This authority is in addition to and does not limit any other authority of the primary financial regulatory agencies. 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 primary financial regulatory agencys jurisdiction over the entity as if the agency action were taken under those statutes. (2) IMPOSITION OF STANDARDS.Standards imposed under this subsection shall be the standards recommended by the Board in accordance with subsection (a) or any other similar standards that the Board deems acceptable after consultation between the Board and the primary financial regulatory agency. (3) FAILURE TO ADOPT STANDARDS; NOTICE TO COUNCIL AND BOARD. If a primary financial regulatory agency fails to implement the prudential standards recommended by the Board or other similar standards that are acceptable to the Board within 60 days of the Boards recommendation, the primary financial regulatory agency shall justify the failure of such agency to act in writing to the Council and the Board within that same time period. (4) BACKUP AUTHORITY OF THE BOARD. (A) IN GENERAL. When notified that a primary financial regulatory agency has failed to impose heightened prudential standards recommended by the Board for financial stability purposes under this section, the Board is authorized to directly impose, require reports regarding, examine for compliance with, and enforce such heightened prudential standards under this section with respect to entities described in section 2(6) for which the primary financial regulatory
43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 agency ordinarily is responsible.
(B) LIMITATION ON BOARD BACKUP AUTHORITY. The Boards standardimposition, report-related, examination, and enforcement activities under this subsection shall be limited to heightened prudential standards imposed under this section and shall be done in coordination with the primary financial regulatory agency. SEC. 1108. EFFECT OF RESCISSION OF IDENTIFICATION (a) NOTICE. When the Council or the Board determines that a company or activity no longer is identified for heightened prudential scrutiny, the Board shall inform the relevant primary financial regulatory agency or agencies (if different from the Board) of that finding. (b) DETERMINATION OF PRIMARY FINANCIAL REGULATORY AGENCY TO CONTINUE. A primary financial regulatory agency that has imposed heightened prudential standards for financial stability purposes under this subtitle shall determine whether standards that it has imposed under this subtitle should remain in effect. SEC. 1109. EMERGENCY FINANCIAL STABILIZATION (a) IN GENERAL. Upon the written approval of the Board of Governors of the Federal Reserve System (which approval shall be made upon a vote of not less than two-thirds of the members of such Board then serving) and the Board of Directors of the Corporation (which approval shall be made upon a vote of not less than two-thirds of the members of such Board then serving), and with the written consent of the Secretary of the Treasury (after consulting with the President), the Corporation may extend credit to or guarantee obligations of solvent insured depository institutions or other solvent companies that are predominantly engaged in activities that are financial in nature, if necessary to prevent financial instability during times of severe
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economic distress, provided that a credit extension or guarantee of obligations under this section shall not include provision of equity in any form. (b) POLICIES AND PROCEDURES.Prior to exercising any authority under this section, the Corporation shall establish policies and procedures governing the extension of credit and the issuance of guarantees. The terms and conditions of any extensions of credit or guarantees issued shall be established by the Corporation with the approval of the Secretary of the Treasury and the Board of Governors of the Federal Reserve System. (c) FUNDING.There shall be available to the Corporation to carry out this section amounts in the Treasury not otherwise appropriated, including for the payment of reasonable administrative expenses. Notwithstanding section 7(d) of the Federal Deposit Insurance Act (12 U.S.C. 1817(d)), such amounts shall be subject to apportionment for the purposes of chapter 15 of title 31, United States Code. Amounts received by the Corporation from assessments imposed under subsection (d), extensions of credit, and guarantees, including payments of principal, interest, and guarantee fees, shall be covered into the Treasury as miscellaneous receipts. (d) RECOUPMENT; ASSESSMENT.Any losses incurred by the Corporation pursuant to subsection (a) shall be recovered from Corporation assessments on large financial companies in the manner provided in section 1609(o) of the Resolution Authority for Large, Interconnected Financial Companies Act of 2009. (e) DEFINITIONS. For purposes of this section, the following definitions apply: (1) ACTIVITIES THAT ARE FINANCIAL IN NATURE. The term activities that are financial in nature means activities that are determined to be financial in nature under section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)) and
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activities that are identified for heightened prudential standards under section 1106 of this title. (2) 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. (3) CORPORATION.The term Corporation means the Federal Deposit Insurance Corporation. (4) INSURED DEPOSITORY INSTITUTION.The term insured depository institution shall have the same meaning as in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813). (5) SOLVENT.The term solvent means assets are more than the obligations to creditors. SEC. 1110. EXAMINATIONS AND ENFORCEMENT ACTIONS FOR INSURANCE AND RESOLUTIONS PURPOSES (a) Examinations for Insurance and Resolutions Purposes. Section 10(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1820(b)(3)) is amended by striking beginning whenever the Board of Directors determines through the period and inserting or identified financial holding company (as defined in section 2(5)) whenever the Board of Directors determines a special examination of any such depository institution is necessary to determine the condition of such depository institution for insurance or such identified financial holding company for resolution purposes.. (b) Enforcement Authority. Section 8(t) of the Federal Deposit Insurance Act (12 U.S.C. 1818(t)) is amended (1) at the end of subparagraph (B) by striking or;
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(2) at the end of subparagraph (C) by striking the period and inserting ; or; (3) by inserting new subparagraph (D), as follows -(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; and (4) by adding new paragraph (6) at the end as follows -(6) For purposes of 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.. SEC. 1111. RULE OF CONSTRUCTION. The authorities granted to agencies under this subtitle are in addition to any rulemaking, report-related, examination, enforcement, or other authority that such agencies may have under other law and in no way shall be construed to limit such other authority, except that any standards imposed for financial stability purposes under this subtitle shall supersede any conflicting less stringent requirements of the primary financial regulatory agency but only the extent of the conflict.
SUBTITLE CIMPROVEMENTS TO SUPERVISION AND REGULATION OF FEDERAL DEPOSITORY INSTITUTIONS
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SEC. 1201. DEFINITIONS. For purposes of this subtitle, the following definitions shall apply: (1) BOARD OF GOVERNORS.The term Board of Governors means the Board of Governors of the Federal Reserve System. (2) CORPORATION.The term Corporation means the Federal Deposit Insurance Corporation. (3) OFFICE OF THE COMPTROLLER OF THE CURRENCY.The term Office of the Comptroller of the Currency means the office established by section 324 of the Revised Statutes (12 U.S.C. 1). (4) OFFICE OF THRIFT SUPERVISION.The term Office of Thrift Supervision means the office established by section 3 of the Home Owners Loan Act (12 U.S.C. 1462a). (5) SECRETARY.The term Secretary means the Secretary of the Treasury. (6) TRANSFER DATE.The term transfer date has the meaning provided in section1205. (7) CERTAIN OTHER TERMS. The terms affiliate, bank holding company, control (when used with respect to a depository institution), depository institution, Federal banking agency, Federal savings association, including, insured branch, insured depository institution, savings association, State savings association, and subsidiary have the same meanings as in section 3 of the Federal Deposit Insurance Act. SEC. 1202. AMENDMENTS TO THE HOME OWNERS LOAN ACT RELATING TO TRANSFER OF FUNCTIONS.
48 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 (a)
AMENDMENTS TO SECTION 2.Section
DISCUSSION DRAFT 10/27/2009 2 of the Home Owners Loan Act (12 U.S.C.
1462) is amended by revising paragraph (1) as follows: (1) BOARD OF GOVERNORS.The term Board of Governors means the Board of Governors of the Federal Reserve System.. (b) AMENDMENTS TO SECTION 3.Section 3 of the Home Owners Loan Act (12 U.S.C. 1462a) is amended (1) by striking subsection (a) and inserting the following new subsection: (a) ESTABLISHMENT OF DIVISION OF THRIFT SUPERVISION.To carry out the purposes of this Act, there is hereby established the Division of Thrift Supervision, which shall be a division within the Office of the Comptroller of the Currency.; (2) in subsection (b) (A) by striking paragraph (1) and inserting the following new paragraph: (1) IN GENERAL.The Division of Thrift Supervision shall be headed by a Deputy Comptroller of the Currency who shall be subject to the general oversight of the Comptroller of the Currency.; (B) in paragraph (2), by striking Director and inserting Comptroller of the Currency; and (C) by striking paragraph (3) and (4); (3) by striking subsections (c), (d), and (e) and inserting the following new subsection: (c) POWERS OF THE COMPTROLLER OF THE CURRENCY.The Comptroller of the Currency shall have all the powers, duties, and functions transferred by the Financial
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Stability Improvement Act of 2009 to the Comptroller of the Currency to carry out this Act.; (4) by redesignating subsections (f) and (i) as subsections (d) and (e),
(5) in subsection (d) (as so redesignated), by striking Director each place such term appears and inserting Comptroller of the Currency; (6) by striking subsections (g), (h), and (j); and (7) in subsection (e) (as so redesignated), by striking compensation of the Director and other employees of the Office and all other expenses thereof and inserting expenses incurred by the Comptroller of the Currency in carrying out this Act. (c) AMENDMENTS TO SECTION 4.Section 4 of the Home Owners Loan Act (12 U.S.C. 1463) is amended by striking Director every time it appears and inserting Comptroller of the Currency. (d) AMENDMENTS TO SECTION 5. (1) UNIVERSAL.Section 5 of the Home Owners Loan Act (12 U.S.C. 1464) is amended (A) by striking Director and Director of the Office of Thrift Supervision each place such term appears and inserting Comptroller of the Currency; and (B) by striking Directors each place such term appears and inserting Comptroller of the Currencys. (2) SPECIFIC PROVISIONS. (A) Section 5(d)(2)(E) of the Home Owners Loan Act is amended by striking or the Resolution Trust Corporation, as appropriate, each place such term appears.
50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 amended (A) by striking paragraph (1) and (3); and
(B) Section 5(d)(3)(B) of the Home Owners Loan Act is amended by striking or the Resolution Trust Corporation. (e) Amendments to Sections 8 and 9.Sections 8 and 9 of the Home Owners Loan Act (12 U.S.C. 11466a, 1467) are each amended by striking Director each place such term appears and inserting Comptroller of the Currency. (f) TECHNICAL AND CONFORMING AMENDMENTS. (1) Definitions.Section 2 of the Home Owners Loan Act (12 U.S.C. 1462) is
(B) by redesignating paragraphs (2), (4), (5), (6), (7), (8) and (9) as paragraphs (1), (2), (3), (4), (5), (6), (7), and (8), respectively. (2) SECTION 3. (A) The heading for section 3 of the Home Owners Loan Act is amended by striking DIRECTOR OF THE OFFICE OF THRIFT SUPERVISION and inserting DIVISION OF THRIFT SUPERVISION. (B) The heading for subsection (e) of section (3) of the Home Owners Loan Act is amended by striking DIRECTOR and inserting COMPTROLLER OF THE CURRENCY. (3) SECTION 5. (A) The heading for paragraph (2)(E)(ii) of section 5(d) of the Home Owners Loan Act and the heading for paragraph (3)(B) of such section are each amended by striking OR RTC. (g) Clerical Amendment.The table of contents section for the Home Owners Loan Act is amended by striking the item relating to section 3 and inserting the following new item:
51 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Sec. 3. Division of Thrift Supervision..
SEC. 1203. 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. There shall be in the Department of the Treasury a bureau, the chief officer of which bureau shall be called the Comptroller of the Currency, and shall perform his or her duties under the general direction of the Secretary of the Treasury. The Comptroller of the Currency shall have the same authority over matters as were vested in the Office of Thrift Supervision or its Director on the day before the date of enactment of the Financial Stability Improvement Act of 2009. 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.. (b) Amendments to Section 327.Section 327 of the Revised Statutes of the United States (12 U.S.C. 4) is amended to read as follows: SEC. 327 DEPUTY COMPTROLLERS. (A) APPOINTMENT.The Secretary of the Treasury shall appoint no more than 5 Deputy Comptrollers of the Currency (1) 1 of whom shall be designated First Deputy Comptroller of the Currency; and (2) 1 of whom shall be designated the Deputy Comptroller of the Division of Thrift Supervision. (b) PAY.The Secretary of the Treasury shall fix the compensation of the Deputy Comptrollers of the Currency and provide such other benefits as the Secretary may determine to be appropriate.
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(c) OATH OF OFFICE; DUTIES.Each Deputy Comptroller shall take the oath of office and shall perform such duties as the Comptroller of the Currency shall direct. (d) SERVICE AS ACTING COMPTROLLER.During a vacancy in the office or during the absence or disability of the Comptroller, each Deputy Comptroller shall possess the power and perform the duties attached by law to the Office of the Comptroller under such order of succession following the First Deputy Comptroller as the Comptroller shall direct.. (c) AMENDMENT TO SECTION 329.Section 329 of the Revised Statutes of the United States (12 U.S.C. 11) is amended by inserting or any Federal savings association before the period at the end. (d) AMENDMENT TO SECTION 481. The fourth sentence of the second undesignated paragraph of Section 5240 of the Revised Statutes of the United States (12 U.S.C. 481) is amended by striking Secretary of the Treasury; and all that follows through the end of the sentence, and inserting Secretary of the Treasury; the employment and compensation of examiners, chief examiners, reviewing examiners, assistant examiners, and of the other employees of the office of the Comptroller of the Currency whose compensation is and shall be paid from assessments on banks or affiliates thereof or from other fees or charges imposed pursuant to this subchapter shall be set and adjusted pursuant to chapter 71 of title five, United States Code and without regard to the provisions of other laws applicable to officers or employees of the United States." (e) AMENDMENT TO SECTION 482.The first sentence in the first undesignated paragraph of Section 5240 of the Revised Statutes of the United States (12 U.S.C. 482) is amended by inserting pursuant to chapter 71 of title five, United States Code, after shall,. SEC. 1204. POWER AND DUTIES TRANSFERRED.
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(a) DIRECTOR OF THE OFFICE OF THRIFT SUPERVISION. (1) TRANSFER OF FUNCTIONS.Except as otherwise provided in this subtitle, all functions of the Director of the Office of Thrift Supervision are transferred to the Office of the Comptroller of the Currency. (2) COMPTROLLERS AUTHORITY.Except as otherwise provided in this subtitle, the Comptroller of the Currency shall succeed to all powers, authorities, rights, and duties that were vested in the Director of the Office of Thrift Supervision under Federal law, including the Home Owners Loan Act, on the day before the transfer date. (3) FUNCTIONS RELATING TO SUPERVISION OF STATE SAVINGS ASSOCIATIONS. (A) TRANSFER OF FUNCTIONS.All functions of the Director of the Office of Thrift Supervision relating to the supervision and regulation of State savings associations are transferred to the Corporation. (B) CORPORATIONS AUTHORITY.The Corporation shall succeed to all powers, authorities, rights, and duties that were vested in the Director of the Office of Thrift Supervision under Federal law, including the Homeowners Loan Act, on the day before the transfer date, relating to the supervision and regulation of State savings associations. (b) APPROPRIATE FEDERAL BANKING AGENCY.Section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813) is amended in subsection (q) (1) by amending paragraph (1) to read as follows: (1) the Comptroller of the Currency in the case of any national bank, Federal savings association or any Federal branch or agency of a foreign bank;; and (2) by amending paragraph (3) to read as follows:
54 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 date. SEC. 1205. TRANSFER DATE.
(3) the Federal Deposit Insurance Corporation in the case of a State nonmember insured bank, a State savings association or a foreign bank having an insured branch.; and (3) by striking paragraph (4). (c) TRANSFER OF CONSUMER FINANCIAL PROTECTION FUNCTIONS.Nothing in subsection (a) or (b) shall affect any transfer of consumer financial protection functions of the Comptroller of the Currency and the Director of the Office of Thrift Supervision to the Consumer Financial Protection Agency as provided in the Consumer Financial Protection Agency Act of 2009. (d) EFFECTIVE DATE.Subsections (a) and (b) shall become effective on the transfer
(a) IN GENERAL.Except as provided in subsection (b), the date for the transfer of functions to the Office of the Comptroller of the Currency and the Corporation under section 1204 shall be 1 year after the date of enactment of this Act. (b) EXTENSION PERMITTED. (1) NOTICE REQUIRED.The Secretary, in consultation with the Comptroller of the Currency and the Director of the Office of Thrift Supervision, may designate a calendar date for the transfer of functions of the Office of Thrift Supervision to the Office of the Comptroller of the Currency, and the Corporation under section 1204 that is later than 1 year after the date of enactment of this Act if the Secretary (A) transmits to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives (i) a written determination that orderly implementation of this title
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is not feasible on the date that is 1 year after the date of enactment of this Act; (ii) an explanation of why an extension is necessary for the orderly implementation of this title; and (iii) a description of the steps that will be taken to effect an orderly and timely implementation of this title within the extended time period; and (B) publishes notice of that designated later date in the Federal Register. (2) EXTENSION LIMITED.In no case shall any date designated under paragraph (1) be later than 18 months after the date of enactment of this Act. (3) EFFECT ON REFERENCES TO TRANSFER DATE.If the Secretary takes the actions provided in paragraph (1) for designating a date for the transfer of functions to the Office of the Comptroller of the Currency, and the Corporation under section 1204, references in this title to transfer date shall mean the date designated by the Secretary. SEC. 1206. OFFICE OF THRIFT SUPERVISION ABOLISHED. Effective 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. 1207. SAVINGS PROVISIONS. (a) OFFICE OF THRIFT SUPERVISION. (1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT AFFECTED.Section 1204(a)(1) and 1206 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.
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(2) CONTINUATION OF SUITS.This Act 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 Director of the Office of Thrift Supervision transferred to the Comptroller of the Currency by this title, the Comptroller of the Currency or the Office of the Comptroller of the Currency shall be substituted for the Director of the Office of Thrift Supervision or the Office of Thrift Supervision, as the case may be, as a party to the action or proceeding as of the transfer date; or (B) for any action or proceeding arising out of a function of the Director of the Office of Thrift Supervision transferred to the Corporation by this title, the Chairman of the Corporation shall be substituted for the Director of the Office of Thrift Supervision as a party to the action or proceeding as of the transfer date. (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 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 those 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 Office of the Comptroller of the Currency, in the case of a function
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of the Director of the Office of Thrift Supervision transferred to the Comptroller of the Currency, until modified, terminated, set aside, or superseded in accordance with applicable law by the Office of the Comptroller of the Currency, by any court of competent jurisdiction, or by operation of law; or (2) the Corporation, in the case of a function of 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. (d) IDENTIFICATION OF REGULATIONS CONTINUED. (1) BY OFFICE OF THE COMPTROLLER OF THE CURRENCY.Not later than the transfer date, the Comptroller of the Currency shall (A) after consultation with the Chairperson of the Corporation, identify the regulations continued under subsection (c) that will be enforced by the Office of the Comptroller of the Currency; and (B) publish a list of such regulations in the Federal Register. (2) BY THE CORPORATION.Not later than the transfer date, the Corporation
(A) after consultation with the Office of the Comptroller of the Currency, identify the regulations continued under subsection (c) that will be enforced by the Corporation; and (B) publish a list of such regulations in the Federal Register. (e) STATUS OF REGULATIONS PROPOSED OR NOT YET EFFECTIVE. (1) PROPOSED REGULATIONS.Any proposed regulation of the Office of Thrift
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Supervision, which that agency, in performing functions transferred by this title, has proposed before the transfer date but has not published as a final regulation before that date, shall be deemed to be a proposed regulation of the Office of the Comptroller of the Currency, or the Corporation, as appropriate, according to its terms. (2) REGULATIONS NOT YET EFFECTIVE.Any interim or final regulation of the Office of Thrift Supervision, which that agency, 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 Corporation, as appropriate, according to its terms. SEC. 1208. REGULATIONS AND ORDERS. In addition to any powers transferred to the Comptroller of the Currency by this title, the Comptroller of the Currency may prescribe such regulations and issue such orders as the Comptroller of the Currency determines to be appropriate to carry out this title and the powers and duties transferred to the Comptroller of the Currency by this title. SEC. 1209. COORDINATION OF TRANSITION ACTIVITIES. Before the transfer date, the Comptroller of the Currency shall (1) consult and cooperate with the Office of Thrift Supervision to facilitate the orderly transfer of functions to the Comptroller of the Currency; (2) determine and redetermine, 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;
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(B) what 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 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. SEC. 1210. INTERIM RESPONSIBILITIES OF OFFICE OF THE COMPTROLLER OF THE CURRENCY AND OFFICE OF THRIFT SUPERVISION. (a) IN GENERAL.When requested by the Comptroller of the Currency to do so before the transfer date, the Office of Thrift Supervision shall (1) pay to the Comptroller of the Currency, 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 that the Comptroller of the Currency determines to be necessary under section 1209(2)(A); (2) detail to the Office of the Comptroller of the Currency such personnel as the Comptroller of the Currency determines to be appropriate under section 1209(2)(B); and (3) make available to the Office of the Comptroller of the Currency such property and provide the Office of the Comptroller of the Currency such administrative services as the Comptroller of the Currency determines to be necessary under section 1209(2)(C). (b) NOTICE REQUIRED.The Comptroller of the Currency shall give the Office of Thrift Supervision reasonable prior notice of any request that the Office of the Comptroller of the Currency intends to make under subsection (a).
60 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 SEC. 1211. EMPLOYEES TRANSFERRED. (a) IN GENERAL. (1) OTS EMPLOYEES.
(A) IN GENERAL.All employees of the Office of Thrift Supervision shall be transferred to either the Comptroller of the Currency or the Corporation for employment. (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 determine the number of employees of the Office of Thrift Supervision necessary to perform or support (I) the functions of the Office of Thrift Supervision that are transferred to the Office of the Comptroller of the Currency by this title; and (II) the functions of the Office of Thrift Supervision that are transferred to the Corporation by this title; (iii) consistent with the numbers determined under clause (ii), jointly identify employees of the Office of Thrift Supervision for transfer to the Office of the Comptroller of the Currency or the Corporation in a manner that the Director of the Office of Thrift Supervision, the Comptroller of the Currency, and the Chairperson of the Corporation, in their discretion, deem equitable. (2) TRANSFER OF EMPLOYEES PERFORMING CONSUMER FINANCIAL PROTECTION
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FUNCTIONS.Nothing
in paragraph (1) shall affect the transfer of employees performing
or supporting consumer financial protection functions of the Comptroller of the Currency and the Director of the Office of Thrift Supervision to the Consumer Financial Protection Agency as provided in the Consumer Financial Protection Agency Act of 2009. (3) APPOINTMENT AUTHORITY FOR EXCEPTED SERVICE TRANSFERRED. (A) IN GENERAL.In the case of employees occupying positions in the excepted 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.The Office of the Comptroller of the Currency and the Corporation may decline to accept 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. (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 transfer date; and (2) receive notice of his or her position assignment not later than 120 days after the effective date of his or her transfer. (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
62 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 5, United States Code.
(2) PRIORITY OF THIS ACT.If any provision of this title conflicts with any protection provided to transferred employees under section 3503 of title 5, United States Code, the provisions of this title shall control. (d) EMPLOYEES STATUS AND ELIGIBILITY.The transfer of functions and employees under this title, and the abolition of the Office of Thrift Supervision, 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.Each employee transferred from the Office of Thrift Supervision shall be placed in a position at either the Office of the Comptroller of the Currency or the Corporation with the same status and tenure as he or she held on the day before the transfer date. (f) NO ADDITIONAL CERTIFICATION REQUIREMENTS.Examiners transferred to the Office of the Comptroller of the Currency or the Corporation shall not be subject to any additional certification requirements before being placed in a comparable examiners position at the Office of the Comptroller of the Currency or the Corporation examining the same types of institutions as they examined before they were transferred. (g) PERSONNEL ACTIONS LIMITED. (1) 1-YEAR PROTECTION.Except as provided in paragraph (2), each employee transferred from the Office of Thrift Supervision holding a permanent position on the day before the transfer date shall not, during the 1-year period beginning on the transfer date, be involuntarily separated, or involuntarily reassigned outside his or her locality pay area as defined by the Office of Personnel Management.
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(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; or (B) terminate an appointment to a position excepted from the competitive service because of its confidential policy-making, policy-determining, or policyadvocating character. (h) PAY. (1) 1-YEAR PROTECTION.Except as provided in paragraph (2), each employee transferred from the Office of Thrift Supervision shall, during the 1-year period beginning on the transfer date, receive pay at a rate not less than the basic rate of pay (including any geographic differential) that the employee received during the 1-year period immediately before the transfer. (2) EXCEPTIONS.Paragraph (1) does not limit the right of the Office of the Comptroller of the Currency or the Corporation to reduce a transferred employees rate of basic pay (A) for cause; (B) for unacceptable performance; or (C) with the employees consent. (3) PROTECTION ONLY WHILE EMPLOYED.Paragraph (1) applies to a transferred employee only while that employee remains employed by the Office of the Comptroller of the Currency or the Corporation. (4) PAY INCREASES PERMITTED.Paragraph (1) does not limit the authority of the Office of the Comptroller of the Currency or the Corporation to increase a transferred
64 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 employees pay. (i) BENEFITS.
(1) RETIREMENT BENEFITS FOR TRANSFERRED EMPLOYEES. (A) IN GENERAL. (i) CONTINUATION OF EXISTING RETIREMENT PLAN.Each employee transferred from the Office of Thrift Supervision may remain enrolled in his or her existing retirement plan or plans as long as he or she remains employed by the Office of the Comptroller of the Currency. (ii) EMPLOYERS CONTRIBUTION.The Office of the Comptroller of the Currency or the Corporation shall pay any employer contributions to the existing retirement plan of each employee transferred from the Office of Thrift Supervision as required under that plan. (B) DEFINITION.For purposes of this paragraph, the term existing retirement plan means, with respect to any employee transferred under this section, the particular retirement plan (including the Financial Institutions Retirement Fund) and any associated thrift savings plan of the agency from which the employee was transferred, which the employee was enrolled in on the day before the transfer date. (2) BENEFITS OTHER THAN RETIREMENT BENEFITS. (A) DURING 1ST YEAR. (i) EXISTING PLANS CONTINUE.Each transferred employee may, for 1 year after the transfer date, retain membership in any other employee benefit program of the Office of Thrift Supervision, including a dental,
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vision, long term care, or life insurance program, to which the employee belonged on the day before the transfer date. (ii) EMPLOYERS CONTRIBUTION.The Office of the Comptroller of the Currency or the Corporation shall pay any employer cost in continuing to extend coverage in the benefit program to the employee as required under that program or negotiated agreements. (B) DENTAL, VISION, OR LIFE INSURANCE AFTER 1ST YEAR.If, after the 1year period beginning on the transfer date, the Office of the Comptroller of the Currency or the Corporation decides not to continue participation in any dental, vision, or life insurance program of the Office of Thrift Supervision, an employee transferred from the Office of Thrift Supervision pursuant to this title who is a member of such a program may, before the decision of the Office of the Comptroller of the Currency or the Corporation takes effect, elect to enroll, without regard to any regularly scheduled open season, in (i) the enhanced dental benefits program established by chapter 89A of title 5, United States Code; (ii) the enhanced vision benefits established by chapter 89B of title 5, United States Code; and (iii) the Federal Employees Group Life Insurance Program established by chapter 87 of title 5, United States Code, without regard to any requirement of insurability. (C) LONG TERM CARE INSURANCE AFTER 1ST YEAR.If, after the 1-year period beginning on the transfer date, the Office of the Comptroller of the
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Currency or the Corporation decides not to continue participation in any long term care insurance program of the Office of Thrift Supervision, an employee transferred from the Office of Thrift Supervision pursuant to this title who is a member of such a program may, before the decision of the Office of the Comptroller of the Currency or the Corporation takes effect, elect to apply for coverage under the Federal Long Term Care Insurance Program established by chapter 90 of title 5, United States Code, under the underwriting requirements applicable to a new active workforce member (as defined in Part 875, title 5, Code of Federal Regulations). (D) EMPLOYEES CONTRIBUTION. (i) IN GENERAL.Subject to clause (ii), an individual enrolled in the Federal Employees Health Benefits program under this subparagraph shall pay any employee contribution required by the plan. (ii) COST DIFFERENTIAL.The difference in costs between the benefits that the Office of Thrift Supervision is providing on the date of enactment of this Act and the benefits provided by this section shall be paid by the Comptroller of the Currency or the Corporation. (iii) FUNDS TRANSFER.The Office of the Comptroller of the Currency or the Corporation 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 Office of the Comptroller of the Currency or the Corporation and the Office of
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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 (i). (E) 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 the Office of Thrift Supervision on the day before the transfer date shall be eligible for coverage by a life 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 Office of the Comptroller of the Currency or the Corporation, without regard to any regularly scheduled open season and requirement of insurability. (ii) EMPLOYEES CONTRIBUTION. (I) IN GENERAL.Subject to subclause (II), an individual enrolled in a life insurance plan under this clause shall pay any employee contribution required by the plan. (II) COST DIFFERENTIAL.The difference in costs between the benefits that the Office of Thrift Supervision is providing on the date of enactment of this Act and the benefits provided by this section shall be paid by the Comptroller of the Currency or the Corporation. (III) FUNDS TRANSFER.The Office of the Comptroller of
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the Currency or the Corporation 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 Office of the Comptroller of the Currency or the Corporation 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 subclause (I). (IV) CREDIT FOR TIME ENROLLED IN OTHER PLANS.For employees transferred under this section, enrollment in a life insurance plan administered by the Office of the Comptroller of the Currency, the Office of Thrift Supervision, or the Corporation 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) EQUITABLE TREATMENT.In administering the provisions of this section, the Office of the Comptroller of the Currency and the Corporation (1) shall take no action that would unfairly disadvantage transferred employees relative to other employees of the Office of the Comptroller of the Currency based on their prior employment by the Office of Thrift Supervision; (2) may take such action as is appropriate in individual cases so that employees
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transferred under this section receive equitable treatment, with respect to those employees 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. SEC. 1212. PROPERTY TRANSFERRED. (a) IN GENERAL. Not later than 90 days after the transfer date, all property of the Office of Thrift Supervision shall be transferred to the Office of the Comptroller of the Currency or the Corporation, allocated in a manner consistent with section 1211(a). (b) CONTRACTS RELATED TO PROPERTY TRANSFERRED.All contracts, agreements, leases, licenses, permits, and similar arrangements 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 together with that property. (c) PRESERVATION OF PROPERTY.Property identified for transfer under this section shall not be altered, destroyed, or deleted before transfer under this section. (d) 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). SEC. 1213. FUNDS TRANSFERRED. Except to the extent needed to dispose of affairs under section 1214, all funds that, on the day before the transfer date, are available to the Director of the Office of Thrift Supervision to pay the expenses of the Office of Thrift Supervision shall be transferred to the Office of the
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Comptroller of the Currency or the Corporation, allocated in a manner consistent with section 1211(a), on the transfer date. SEC. 1214. DISPOSITION OF AFFAIRS. (a) IN GENERAL.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 agency related to any function transferred to the Office of the Comptroller of the Currency or the Corporation by this title (A) manage any employees of the Office of Thrift Supervision and provide for the payment of the compensation and benefits of any such employees that accrue before the transfer date; and (B) manage any property of the Office of Thrift Supervision until the property is transferred under section 1212; and (2) may take any other action necessary to wind up the affairs of the Office of Thrift Supervision relating to the transferred functions. (b) AUTHORITY AND STATUS OF DIRECTOR. (1) IN GENERAL.Notwithstanding the transfers of functions under this title, the Director of the Office of Thrift Supervision shall, during the 90-day period beginning on the transfer date, retain and may exercise any authority vested in the Director on the day before the transfer date that is necessary to carry out the requirements of this title during that period. (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,
71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 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 he or she was receiving on the day before the transfer date. SEC. 1215. 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 to be transferred to the Office of the Comptroller of the Currency, shall (1) continue to provide those services, subject to reimbursement, until the transfer of those functions is complete; and (2) consult with any such agency to coordinate and facilitate a prompt and orderly transition. SEC. 1216. TREATMENT OF SAVINGS AND LOAN HOLDING COMPANIES (a) Section 2 of the Home Owners Loan Act (12 U.S.C. 1462) is amended in paragraph (1) by striking DIRECTOR.The term Director means the Director of the Office of Thrift Supervision. and inserting COMPTROLLER.The term Comptroller means the Comptroller of the Currency. (b) Section 10 of the Home Owners Loan Act (12 U.S.C. 1467a is amended as follows: (1) In subsection (a) (1)(A) by deleting Director and inserting Comptroller of the Currency; (2) In subsection (m) as follows: (A) in paragraph (2) by striking DIRECTOR and inserting COMPTROLLER;
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(B) in paragraph (2) by striking Director may grant and inserting Comptroller of the Currency may grant; (C) in paragraph (2) by striking the Director deems and inserting the Comptroller deems; (D) in subparagraph (2)(A) by striking Director and inserting Comptroller (E) in subparagraph (2)(B) by striking Director and inserting Comptroller (F) in subparagraph (2)(B)(iii) by striking Director and inserting Comptroller (G) in paragraph (4)(D) by striking Director and inserting Comptroller (H) in paragraph (4)(E) by striking Director and inserting Comptroller (I) in paragraph (7)(B) by striking Director and inserting Comptroller (3) In subsection (o) as follows: (A) in subparagraph (3) in the heading by striking DIRECTOR and inserting BOARD; (B) in subparagraph (3)(A) by striking Director and inserting Board; (C) in subparagraph (3)(B) by striking Director and inserting Board; (D) in subparagraph (3)(C) by striking Director and inserting Board; (E) in subparagraph (3)(D) by striking Director and inserting Comptroller (F) in paragraph (7) by deleting chartered by the Director and inserting chartered by the Comptroller; (G) in paragraph (7) by deleting regulations as the Director may and inserting regulations as the Board may (4) by deleting subsections (a) through (n), and (p) through (t), and redesignating current subsections (m) and (o) as (a) and (b).
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SEC. 1217. PRACTICES OF CERTAIN MUTUAL THRIFT HOLDING COMPANIES PRESERVED. (a) TREATMENT OF DIVIDENDS BY CERTAIN MUTUAL HOLDING COMPANIES. Section 3(g) of the Bank Holding Company Act (12 U.S. C. 1842(g)) is amended (1) by inserting new paragraphs (3) through (7) as follows: (3) DECLARATION OF DIVIDENDS. Every subsidiary savings association of a mutual holding company shall give the Board not less than 30 days advance notice of the proposed declaration by its directors of any dividend on its guaranty, permanent, or other nonwithdrawable stock. Such notice period shall commence to run from the date of receipt of such notice by the Board. Any such dividend declared within such period, or without the giving of such notice to the Board, shall be invalid and shall confer no rights or benefits upon the holder of any such stock. (4) WAIVER OF DIVIDENDS.Any mutual thrift holding company organized under section 10(b) of the Home Owners Loan Act shall be permitted to waive such companys right to receive any dividend declared by a subsidiary, if (A) no insider of the mutual holding company, associate of an insider, or taxqualified 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; (B) the mutual holding company provides the Board with written notice of its intent to waive its right to receive dividends 30 days prior to the proposed date of payment of the dividend; and (C) the Board does not object.
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(5) STANDARDS FOR WAIVER OF DIVIDEND.The Board shall not object to a notice of intent to waive dividends under paragraph (4) if (A) the waiver would not be detrimental to the safe and sound operation of the savings association; and (B) 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 directors fiduciary duties to the mutual members of such company. (6) RESOLUTION INCLUDED IN WAIVER NOTICE.A dividend waiver notice shall include a copy of the resolution of the board of directors of the mutual holding company, in form and substance satisfactory to the Board, together with any supporting materials relied upon by the board of directors, concluding that the proposed dividend waiver is consistent with the board of directors fiduciary duties to the mutual members of the mutual holding company. (7) VALUATION. The Board will not consider waived dividends in determining an appropriate exchange ratio in the event of a full conversion to stock form. SEC. 1218. COMPOSITION OF BOARD OF DIRECTORS OF THE FEDERAL DEPOSIT INSURANCE CORPORATION. Section 2 of the Federal Deposit Insurance Act (12 U.S.C. 1812) is amended (1) in subsection (a)(1) (A) in subparagraph (B), by striking Director of the Office of Thrift Supervision and inserting Chairman of the Board of Governors of the Federal Reserve System, or such other member of the Board of Governors as the
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Chairman of the Board of Governors shall designate; (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 and pending the appointment of a successor, or during the absence or disability of the Comptroller of the Currency, the acting Comptroller of the Currency shall be a member of the Board of Directors in the place of the Comptroller of the Currency.; and (2) in subsection (f)(2), by striking or of the Office of Thrift Supervision. CONFORMING AMENDMENTS SEC. 1219. AMENDMENTS TO SECTION 3. Section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813) is amended (1) in subsection (b)(1)(C) (relating to the definition of the term savings association), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (2) in subsection (l)(5) (relating to the definition of the term deposit), in the introductory text, by striking , Director of the Office of Thrift Supervision, and inserting , and; (3) in subsection (q) (relating to the definition of the term appropriate Federal banking agency) (A) by amending paragraph (1) to read as follows:
(1) the Comptroller of the Currency, in the case of any national bank, any Federal branch or agency of a foreign bank, or any savings association or savings and loan holding company;; (B) in paragraph (2)(F), by adding and at the end after the semi-colon;
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(C) in paragraph (3), by striking ; and and inserting a period (D) by amending paragraph (3) to read as follows: (3) the Federal Deposit Insurance Corporation in the case of a State nonmember insured bank, State savings association, or a foreign bank having an insured branch. and (E) by striking paragraph (4).
(4) in subsection (z) (relating to the definition of the term Federal banking agency), by striking the Director of the Office of Thrift Supervision,. SEC. 1220. AMENDMENTS TO SECTION 7. Section 7(a) of the Federal Deposit Insurance Act (12 U.S.C. 1817) is amended (1) in paragraph (2) (A) in subparagraph (A) (i) in the first sentence, by striking the Director of the Office of Thrift Supervision; (ii) in the second sentence, by striking the Director of the Office of Thrift Supervision; (B) in subparagraph (B), by striking Comptroller of the Currency, 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 Board of Governors of the Federal Reserve System,; (2) 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;
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(3) in paragraph (7), by striking Director of the Office of Thrift Supervision, SEC. 1221. AMENDMENTS TO SECTION 8. Section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) is amended (1) in subsection (a)(8)(B)(ii), in the last sentence (A) by striking Director of the Office of Thrift Supervision each place it appears and inserting Comptroller of the Currency; (B) by inserting the Office of Thrift Supervision, as successor to after as a successor to and before the Federal Savings and Loan Insurance Corporation; (4) in subsection (o) (A) by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (5) in subsection (w)(3)(A), by striking Office of Thrift Supervision and inserting Office of the Comptroller of the Currency. SEC. 1222. AMENDMENTS TO SECTION 11. Section 11 of the Federal Deposit Insurance Act (12 U.S.C. 1821) is amended (1) in subsection (c) (A) 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), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (iii) in subparagraph (B), by striking Director of the Office of
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colon;
Thrift Supervision and inserting Comptroller of the Currency; (2) in subsection (d) (A) in paragraph (2)(F)(i), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (B) in paragraph (17)(A) (i) by striking Comptroller of the Currency; and (B) by striking appropriate; (C) in paragraph (18)(B), by striking or the Director of the Office of Thrift Supervision; SEC. 1223. AMENDMENTS TO SECTION 13. Section 13(k)(1)(A)(iv) of the Federal Deposit Insurance Act (12 U.S.C. 1823(k) (1)(A)(iv)) is amended by striking Director of The Office of Thrift Supervision and inserting Comptroller of the Currency. SEC. 1224. AMENDMENTS TO SECTION 18. Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is amended (1) in subsection (c) (A) in paragraph (2) (i) in subparagraph (A), by striking bank; and inserting bank or a savings association;;
(ii) in subparagraph (B), by adding and at the end after the semi-
(iii) in subparagraph (C), by striking bank (except a savings bank
supervised by the Director of the Office of Thrift Supervision); and and

inserting bank or State savings association.; and
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(iv) by striking subparagraph (D); and
(2) in subsection (g)(1), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (3) in subsection (i) (A) in paragraph (2) (i) by amending subparagraph (B) to read as follows:
(B) the Corporation, if the resulting institution is to be a State nonmember insured bank or insured State savings association.; and (ii) by striking subparagraph (C);
(4) in subsection (m) (A) in paragraph (1) (i) in subparagraph (A), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (ii) in subparagraph (B), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (B) in paragraph (2) (i) in subparagraph (A), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (ii) in subparagraph (B), by striking Director of the Office of Thrift Supervision each place it appears and inserting Comptroller of the Currency (C) in paragraph (3) (i) in subparagraph (A), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; and
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(ii) in subparagraph (B), by striking Office of Thrift Supervision and inserting Comptroller of the Currency. SEC. 1225. AMENDMENTS TO SECTION 28. Section 28 of the Federal Deposit Insurance Act (12 U.S.C. 1831e) is amended (1) in subsection (e) (A) in paragraph (2) (i) in subparagraph (A)(ii), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (ii) in subparagraph (C), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (iii) in subparagraph (F), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (B) in paragraph (3) (i) in subparagraph (A), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (ii) in subparagraph (B), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (2) in subsection (h)(2), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency. SEC. 1226. AMENDMENTS TO THE ALTERNATIVE MORTGAGE TRANSACTION PARITY ACT OF 1982. (a) AMENDMENTS TO SECTION 802.Section 802(a)(3) of the Alternative Mortgage Transaction Parity Act of 1982 (12 U.S.C. 3801) is amended
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(1) by striking Comptroller of the Currency, and inserting Comptroller of the Currency and ; and (2) by striking , and the Director of the Office of Thrift Supervision. (b) AMENDMENTS TO SECTION 804.Section 804(a) of the Alternative Mortgage Transaction Parity Act of 1982 (12 U.S.C. 3803) is amended (1) by amending paragraph (1) to read as follows: (1) with respect to banks, savings associations, mutual savings banks, and savings banks, only to transactions made in accordance with regulations governing alternative mortgage transactions as issued by the Comptroller of the Currency to the extent that such regulations are authorized by rulemaking authority granted to the Comptroller of the Currency under laws other than this section.; and (2) by striking paragraph (3). SEC. 1227. AMENDMENTS TO THE BANK HOLDING COMPANY ACT OF 1956. (a) AMENDMENTS TO SECTION 4.Section 4 of the Bank Holding Company Act of 1956 (12 U.S.C. 1843) is amended (A) in subsection (f) paragraph (12)(A) (i) by striking Resolution Trust Corporation; and SEC. 1228. AMENDMENTS TO THE BANK PROTECTION ACT OF 1968. Section 2 of the Bank Protection Act of 1968 (12 U.S.C. 1881) is amended (1) in paragraph (1) by striking national banks, and inserting national banks and federal savings associations.; (2) in paragraph (2), by inserting and at the end; (3) in paragraph (3), by striking , and at the end and inserting a period; and
82 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 (4) by striking paragraph (4).
SEC. 1229. AMENDMENTS TO THE BANK SERVICE CORPORATION ACT. (a) AMENDMENTS TO SECTION 1.Section 1(b) of the Bank Service Corporation Act (12 U.S.C. 1861(b)) is amended (1) in paragraph (4), by striking insured bank, and inserting insured bank or (2) by striking Office of Thrift Supervision and inserting Office of the Comptroller of the Currency; and (3) by striking , the Federal Savings and Loan Insurance Corporation,. SEC. 1230. AMENDMENTS TO THE COMMUNITY REINVESTMENT ACT OF 1977. Section 803 of the Community Reinvestment Act of 1977 (12 U.S.C. 2902) is amended in subsection (1) (1) in paragraph (A) by striking national banks and inserting national banks or savings associations (the deposits of which are insured by the Federal Deposit Insurance Corporation); (2) in paragraph (B) by striking and bank holding companies; and inserting , bank holding companies and savings and loan holding companies; (3) by striking paragraph (D); and SEC. 1231. AMENDMENTS TO THE DEPOSITORY INSTITUTION MANAGEMENT INTERLOCKS ACT. (a) AMENDMENT TO SECTION 207.Section 207 of the Depository Institution Management Interlocks Act (12 U.S.C. 3206) is amended (1) in paragraph (1) by striking national banks, and inserting national banks and Federal savings associations (the deposits of which are insured by the Federal
83 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Deposit Insurance Corporation), ; (2) by striking paragraph (4);
(3) in paragraph by striking and bank holding companies, and inserting , bank holding companies or savings and loan holding companies, (4) by renumbering paragraphs (5) and (6) as paragraphs (4) and (5), respectively. (b) AMENDMENT TO SECTION 209.Section 209 of the Depository Institution Management Interlocks Act (12 U.S.C. 3207) is amended (1) in paragraph (1), by striking national banks, and inserting national banks and Federal savings associations (the deposits of which are insured by the Federal Deposit Insurance Corporation), ; (2) by striking paragraph (4); (3) in paragraph by striking and bank holding companies, and inserting , bank holding companies or savings and loan holding companies, (4) by renumbering paragraph (5) as paragraph (4). (f) AMENDMENT TO SECTION 210.Subsection 210(a) of the Depository Institution Management Interlocks Act (12 U.S.C. 3208(a)) is amended by striking his and inserting his or her. SEC. 1232. AMENDMENTS TO THE EMERGENCY HOMEOWNERS RELIEF ACT. Section 110 of the Emergency Homeowners Relief Act (12 U.S.C. 2709) is amended (1) by striking the Federal Home Loan bank Board and inserting Federal Housing Finance Agency; and (2) by striking the Federal Savings and Loan Insurance Corporation. SEC. 1233. AMENDMENTS TO THE EQUAL CREDIT OPPORTUNITY ACT.
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Section 704 of the Equal Credit Opportunity Act (15 U.S.C. 1691c) is amended in subsection (a) (1) in paragraph (1)(A), by striking and Federal branches and Federal agencies of foreign banks, and inserting , Federal branches and Federal agencies of foreign banks, or a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;; (2) by striking paragraph (2); and (3) by renumbering paragraphs (3) through (9) as paragraphs (2) through (8). SEC. 1234. AMENDMENTS TO THE FEDERAL CREDIT UNION ACT. (a) AMENDMENTS TO SECTION 206.Section 206 of the Federal Credit Union Act (12 U.S.C. 1786) is amended (1) in subsection (g)(7) (A) in subparagraph (A) (i) in clause (vi) (I) by striking Federal Housing Finance Board and inserting Federal Housing Finance Agency; (II) by striking and after the semi-colon; (III) striking the semi-colon and inserting a period; and (ii) by striking clause (vii) (IV) in Subparagraph (D), clause (iv), by striking at the end ; and and inserting a period; and (V) striking clause (v). SEC. 1235. AMENDMENTS TO THE FEDERAL FINANCIAL INSTITUTIONS
85 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 EXAMINATION COUNCIL ACT OF 1978.
(a) AMENDMENT TO SECTION 1002.Section 1002 of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3301) is amended (1) by striking Federal Home Loan Bank Board and inserting Federal Housing Finance Agency. (b) AMENDMENT TO SECTION 1003.Section 1003 of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3302) is amended (1) in paragraph (1) by striking the Office of Thrift Supervision (c) AMENDMENTS TO SECTION 1004Section 1004 of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3303) is amended in subsection (a) (1) by striking paragraph (4); and (2) by renumbering paragraph (5) as paragraph (4). SEC. 1236. AMENDMENTS TO THE FEDERAL HOME LOAN BANK ACT. (a) AMENDMENTS TO SECTION 18.Subsection 18(c) of the Federal Home Loan Bank Act (12 U.S.C. 1438(c)) is amended (1) by striking Director of the Office of Thrift Supervision each place it appears and inserting Comptroller of the Currency; (2) in paragraph (1)(B), by striking and the agencies under its administration or supervision; (3) in paragraph (5), by striking and such agencies. (b) AMENDMENTS TO SECTION 21A.Section 21A of the Federal Home Loan Bank Act (12 U.S.C. 1441a) is repealed. SEC. 1237. AMENDMENTS TO THE FEDERAL RESERVE ACT.
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(a) AMENDMENTS TO SECTION 19.Section 19 of the Federal Reserve Act (12 U.S.C. 461(b)) is amended (1) in subsection (b)(1)(F) by striking the Director of the Office of Thrift Supervision and inserting the Comptroller of the Currency. (B) in subsection (b)(4)(B), by striking the Director of the Office of Thrift Supervision and inserting the Comptroller of the Currency. SEC. 1238. AMENDMENTS TO THE FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT ACT OF 1989. (a) AMENDMENTS TO SECTION 302.Section 302(1) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1467a nt.) is amended by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency. (b) AMENDMENT TO SECTION 305.Section 305 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1464 nt.) is amended (1) in subsection (b) (A) in paragraph (1) (i) by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; and (c) AMENDMENT TO SECTION 308.Subsection 308(a) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1463 nt.) is amended by striking Director of the Office of Supervision and Comptroller of the Currency. (d) AMENDMENTS TO SECTION 402.Section 402 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1437 nt.) is amended (1) in subsection (a), by striking Director of the Office of Thrift Supervision
87 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 and inserting Comptroller of the Currency;
(2) in subsection (b), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (3) in subsection (e) (A) in paragraph (1), by striking the Office of Thrift Supervision and inserting Office of the Comptroller of the Currency; (B) in paragraph (2), by striking Director of the Office of Thrift Supervision each place it appears and inserting Comptroller of the Currency; (C) in paragraph (3), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; and (D) in paragraph (4), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency. (e) AMENDMENT TO SECTION 1103.Section 1103(a) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3332(a)) is amended by striking and the Resolution Trust Corporation. (f) AMENDMENTS TO SECTION 1205.Subsection 1205(b) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1818 nt.) is amended (1) in paragraph (1) (A) in subparagraph (B), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (B) by striking subparagraph (D); (C) by redesignating subparagraphs (E) and (F) as paragraphs (D) and (E), respectively;
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(2) in paragraph (2), by striking paragraph (1)(F) and inserting paragraph (1)(E); and (3) in paragraph (5), by striking through (E) and inserting through (D). (g) AMENDMENTS TO SECTION 1206.Section 1206 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833b) is amended (1) by striking the Thrift Depositor Protection Oversight Board of the Resolution Trust Corporation; (2) by inserting and after the Federal Housing Finance Board and before the Farm Credit Administration; and (3) by striking , and the Office of Thrift Supervision. (h) AMENDMENTS TO SECTION 1216.Section 1216 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833e) is amended (1) in subsection (a) (A) by striking paragraphs (2), (5), and (6); and (C) by redesignating paragraphs (3), and (4), as paragraphs (2), and (3), respectively; (2) in subsection (c) (A) by striking the Director of the Office of Thrift Supervision, and inserting , and; and (B) by striking the Thrift Depositor protection Oversight Board of the Resolution Trust Corporation, and the Resolution Trust Corporation. (3) in subsection (d) (A) by striking paragraphs (3), (5) and (6); and
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(C) by redesignating paragraphs (4), (7), and (8) as paragraphs (3), (4), and (5), respectively. SEC. 1239. AMENDMENTS TO THE HOUSING ACT OF 1948. Section 502(c) of the Housing Act of 1948 (12 U.S.C. 1701c(c)) is amended in the introductory text by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency . SEC. 1240. AMENDMENTS TO THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1992. (a) AMENDMENTS TO SECTION 543.Section 543 of the Housing and Community Development Act of 1992 (12 U.S.C. 1707 nt.) is amended (1) in subsection (c)(1) (A) by amending subparagraph (C) to read as follows: (C) Comptroller of the Currency; and (B) by striking subparagraphs (D) through (F); and (C) by redesignating subparagraphs (G) and (H) as subparagraphs (D) and (E), respectively; (2) in subsection (f) (A) in paragraph (2) (i) by striking the Office of Thrift Supervision,; and (ii) in subparagraph (D), by striking Office of Thrift Supervision, and inserting Comptroller of the Currency; (B) in paragraph (3) (i) by striking the Office of Thrift Supervision, and inserting
90 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Comptroller of the Currency; and
(ii) in subparagraph (D), by striking Office of Thrift Supervision, and inserting Comptroller of the Currency. (b) AMENDMENT TO SECTION 1315.Section 1315(b) of the Housing and Community Development Act of 1992 (12 U.S.C. 4515(b)) is amended by striking the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision. and inserting and the Federal Deposit Insurance Corporation.. (c) AMENDMENT TO SECTION 1317.Section 1317(c) of the Housing and Community Development Act of 1992 (12 U.S.C. 4517(c)) is amended (1) by striking the Federal Deposit Insurance Corporation, or the Director of the Office of Thrift Supervision and inserting or the Federal Deposit Insurance Corporation. SEC. 1241. AMENDMENTS TO THE 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 (a) by striking Federal Home Loan Bank Board and inserting Federal Housing Finance Agency;. SEC. 1242. AMENDMENTS TO THE NATIONAL HOUSING ACT. (a) AMENDMENTS TO SECTION 203.Section 203(s) of the National Housing Act (12 U.S.C. 1709(s)) is amended (1) in paragraph (5), by revising the paragraph to read as follows:
91 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 (H). and (3) by striking paragraph (8).
if the mortgagee is a national bank, a subsidiary or affiliate of such a bank, a Federal savings association or a subsidiary or affiliate of a savings association, the Comptroller of the Currency; (2) in paragraph (7) by inserting or State savings association after State bank;
SEC. 1243. AMENDMENTS TO THE RIGHT TO FINANICAL PRIVACY ACT OF 1978. Section 11(7) of the Right to Financial Privacy Act of 1978 (12 U.S.C. 3401(7)) is amended (1) by striking subparagraph (B); and (2); by designating subparagraphs (C) through (I) as subparagraphs (B) through
SEC. 1244. AMENDMENTS TO THE BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT OF 1985. (a) AMENDMENTS TO SECTION 255.Section 255(g)(1)(A) of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 905(g)(1)(A)) is amended (1) by striking Director of the Office of Thrift Supervision. (b) AMENDMENTS TO SECTION 256.Section 256(h)(4) of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 906(h)(4)) is amended (1) by striking subparagraphs (C) and (G); and (2) by redesignating subparagraphs (D),(E), (F) and (H) as subparagraphs (C) through (G), respectively. SEC. 1245. AMENDMENTS TO THE CRIME CONTROL ACT OF 1990.
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(a) AMENDMENTS TO SECTION 2539.Section 2539(c)(2) of the Crime Control Act of 1990, Public Law 101-647, is amended (1) by striking subparagraph (F) and redesignating subparagraphs (G) and (H) as subparagraphs (F) through (G). (b) AMENDMENT TO SECTION 2554.Section 2554(b)(2) of the Crime Control Act of 1990, Public Law 101-647, is amended by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency. SEC. 1246. AMENDMENT TO THE FLOOD DISASTER PROTECTION ACT OF 1973. Section 3(a)(5) of the Flood Disaster Protection Act of 1973, as amended (42 U.S.C. 4003(a)(5)) is amended (1) by striking the Office of Thrift Supervision.. SEC. 1247. AMENDMENTS TO THE INVESTMENT COMPANY ACT OF 1940. (a) AMENDMENT TO SECTION 6.Section 6(a)(3) of the Investment Company Act of 1940 (15 U.S.C. 80a-6(a)(3)) is amended by striking Federal Savings and Loan Insurance Corporation and inserting Comptroller of the Currency. SEC. 1248. AMENDMENTS TO THE NEIGHBORHOOD REINVESTMENT CORPORATION ACT. (a) Corporation Act, as amended (42 U.S.C. 8105(c)(3)) is amended (1) by striking the Federal Home Loan Bank Board and inserting Federal Housing Finance Agency. SEC. 1249. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934. (a) AMENDMENTS TO SECTION 3.Section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c) is amended
93 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 (1) in subsection (a) (A) in paragraph (34)(A)
(i) in clause (i), by striking bank; and inserting bank, or a savings association (as defined in section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813 (b))), the deposits of which are insured by the Federal Deposit Insurance Corporation, a subsidiary or a department or division of any such savings association, or a savings and loan holding;; (ii) by striking clause (iv); and (iii) by redesignating clause (v) as clause (iv); (C) in paragraph (B) (i) in clause(i), by striking bank; and inserting bank, or a savings association (as defined in section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813 (b))), the deposits of which are insured by the Federal Deposit Insurance Corporation, a subsidiary or a department or division of any such savings association, or a savings and loan holding;; (ii) by striking clause (iv); and (iii) by redesignating clause (v) as clause (iv); (D) in paragraph (C) (i) in clause (i), by striking bank; and inserting bank, or a savings association (as defined in section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813 (b))), the deposits of which are insured by the Federal Deposit Insurance Corporation, a subsidiary or a department or division of any such savings association, or a savings and loan holding;;
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(ii) by striking clause (iv); and (iii) by redesignating clause (v) as clause (iv); (E) in paragraph (F) (i) in clause (i), by striking bank; and inserting or a savings association (as defined in section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813 (b))), the deposits of which are insured by the Federal Deposit Insurance Corporation; (ii) by striking clause (ii); and (iii) redesignating clauses (iii), (iv), and (v), as clauses (ii), (iii) and (iv), respectively. (b) AMENDMENTS TO SECTION 15C.Section 15C of the Securities Exchange Act of 1934 (15 U.S.C. 78o-5) is amended in subsection (g)(1) (A) by striking the Director of the Office of Thrift Supervision, the Federal Savings and Loan Insurance Corporation,. SEC. 1250. AMENDMENTS TO TITLE 18, UNITED STATES CODE (a) AMENDMENT TO SECTION 212.Section 212(c)(2) of Title 18, United States Code (18 U.S.C. 212(c)(2)) is amended (1) by striking (C); and (2) by relettering (D) through (H) as (C) through (G). (b) AMENDMENT TO SECTION 657.Section 657 of Title 18, United States Code (18 U.S.C. 657) is amended by striking Office of Thrift Supervision, the Resolution Trust Corporation. (c) AMENDMENT TO SECTION 981.Section 981(a)(1)(D) of Title 18, United States Code
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(1) by striking Resolution Trust Corporation; and (2) by striking or the Office of Thrift Supervision. (e) AMENDMENT TO SECTION 982.Section 982(a)(3) of Title 18, United States Code (18 U.S.C. 982(a)(3)) is amended (1) by striking Resolution Trust Corporation;and (2) by striking or the Office of Thrift Supervision. (f) AMENDMENT TO SECTION 1006.Section 1006 of Title 18, United States Code (18 U.S.C. 1006) is amended (1) by striking Office of Thrift Supervision; and (2) by striking the Resolution Trust Corporation. (g) AMENDMENT TO SECTION 1014.Section 1014 of Title 18, United States Code (18 U.S.C. 1014) is amended (1) by striking Office of Thrift Supervision; and (2) by striking Resolution Trust Corporation. (h) AMENDMENT TO SECTION 1032.Section 1032 of Title 18, United States Code (18 U.S.C. 1032) is amended (1) by striking or the Director of the Office of Thrift Supervision; and (2) by striking the Resolution Trust Corporation; SEC. 1251. AMENDMENTS TO TITLE 31, UNITED STATES CODE (a) AMENDMENT TO SECTION 309.Section 309 of Title 31, United States Code (31 U.S.C. 309) is amended to read as follows:
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The Division of Thrift Supervision established under section 3(a) of the Home Owners Loan Act shall be a division in the Office of the Comptroller of the Currency.. (b) AMENDMENTS TO SECTION 321.Section 321 of Title 31, United States Code (31 U.S.C. 321) is amended (1) by inserting and at the end of subsection (c)(1); (2) in subsection (c)(2) by striking Comptroller of the Currency; and and inserting Comptroller of the Currency.; and (3) by striking subsection (e). (c) AMENDMENTS TO SECTION 714.Section 714 of Title 31, United States Code (31 U.S.C. 714) is amended (1) in subsection (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..
SUBTITLE DFURTHER IMPROVEMENTS TO THE REGULATION OF BANK HOLDING COMPANIES AND DEPOSITORY INSTITUTIONS
SEC. 1301. TREATMENT OF CREDIT CARD BANKS, INDUSTRIAL LOAN COMPANIES, AND CERTAIN OTHER COMPANIES UNDER THE BANK HOLDING COMPANY ACT. (a) DEFINITIONS.Section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841), is amended (1) in subsection (a)(5), by adding at the end the following new subparagraph: (G) No company is a bank holding company by virtue of its ownership or control of a section six holding company or any subsidiary of a section six
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holding company, so long as the requirements of sections 4(p) and 6 of this Act are met, as applicable, by the section six holding company;
(2) in subsection (c)(1)(A), by striking insured bank and inserting insured depository institution, and by striking section 3(h) of the Federal Deposit Insurance Act and inserting section 3(c)(2) of the Federal Deposit Insurance Act.;
(3) in subsection (c)(2) (A) by striking subparagraph (B); (B) by striking subparagraphs (F) and (H), and (C) by redesignating existing subparagraphs (C), (D), (E) and (G) as subparagraphs (B), (C), (D) and (E), respectively; and (4) at the end of section 2, adding the following new subsection: (r) SECTION SIX HOLDING COMPANIES. A section six holding company means a company that is required to be established as an intermediate holding company under section 6 of this Act.. (b) NONBANKING ACTIVITIES EXCEPTIONS. (1) IN GENERAL. Section 4 of the Bank Holding Company Act of 1956 (12 U.S.C. 1843), is amended (A) in subparagraph (f)(1)(B) by striking for purposes of this Act and inserting for purposes of section 4(a); and (B) by adding after section 4(f)(2)(C), the following new section: (D) such company fails to (i) establish and register a section six holding company pursuant to section 6 of this Act within 90 days after the date of enactment of the Financial Stability Improvement Act of 2009,
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unless the Board grants an extension of such period for compliance which shall not exceed 180 additional days; and (ii) conduct all its activities which are financial in nature or incidental thereto as determined under section 4(k) through such section six holding company, in accordance with regulations prescribed by or orders issued by the Board, pursuant to section 6 of this Act.; and (C) by inserting at the end the following new subsection: (p) CERTAIN COMPANIES NOT SUBJECT TO THIS ACT. (1) IN GENERAL. Except as provided in paragraphs (6) and (7), any company which (A) (i) was (I) a unitary savings and loan holding company on May 4 1999, or became a unitary savings and loan holding company pursuant to an application pending before the Office of Thrift Supervision on of before that date, and that (aa) on June 30, 2009, continued to control not fewer than one savings association that it controlled on May 4, 1999, which became a bank for purposes of the Bank Holding Company Act as
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a result of the enactment of section 1301(a)(2)(A); and (bb) on June 30, 2009 and the date of enactment of the Financial Stability Improvement Act of 2009, such savings association subsidiary was and remains a qualified thrift lender (as determined by section 10 of the Home Owners Loan Act); or (ii) on June 30, 2009, controlled (I) an institution which became a bank as a result of the enactment of section 1301(a)(2)(B) of the Financial Stability Improvement Act of 2009, or (II) an institution it has continuously controlled since March 5, 1987, which became a bank as a result of the enactment of the Competitive Equality Banking Act of 1987, pursuant to subsection (f); (B) was not on June 30, 2009 (i) a bank holding company; or (ii) subject to the Bank Holding Company Act by reason of section 8(a) of the International Banking Act of 1978 (12 U.S.C. 3106(a)); and (C) on June 30, 2009, directly or indirectly controlled shares or engaged in activities that did not, on the day before the date of enactment of the Financial Stability Act of 2009 comply with the activity or
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investment restrictions on financial holding companies in section 4 in accordance with regulations prescribed by the Board, that did not, on the day before the date of enactment of the Financial Stability Act of 2009 comply with the activity or investment restrictions on financial holding companies in section 4 in accordance with regulations prescribed by the Board, shall not be treated as a bank holding company for purposes of this Act solely by virtue of such companys control of such institution and control of a section six holding company established pursuant to section 6. (2) LOSS OF EXEMPTION.A company described in paragraph (1) shall no longer qualify for the exemption provided under that paragraph if (A) such company fails to (i) establish and register a section six holding company pursuant to section 6 of this Act within 90 days after the date of enactment of the Financial Stability Improvement Act of 2009, unless the Board grants an extension of such period for compliance which shall not exceed 180 additional days; and (ii) maintain a section six holding company in compliance with all the requirements for a section six holding company under section 6 of this Act. (B) such company directly or indirectly (including through the section six holding company it must form pursuant to this subsection and section 6 of this Act) acquires ownership or control of more than 5 percent
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of the shares or assets of an additional bank or insured depository institution after June 30, 2009, other than (i) shares held as a bona fide fiduciary (whether with or without the sole discretion to vote such shares); (ii) shares held by any person as a bona fide fiduciary solely for the benefit of employees of either the company described in paragraph (1) or any subsidiary of that company and the beneficiaries of those employees; (iii) shares held temporarily pursuant to an underwriting commitment in the normal course of an underwriting business; (iv) shares held in an account solely for trading purposes; (v) shares over which no control is held other than control of voting rights acquired in the normal course of a proxy solicitation; (vi) loans or other accounts receivable acquired from an insured depository institution in the normal course of business; (vii) shares or assets acquired in securing or collecting a debt previously contracted in good faith, during the 2-year period beginning on the date of such acquisition or for such additional time (not exceeding 3 years) as the Board may permit if the Board determines that such an extension will not be detrimental to the public interest;
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(C)(i) the section six holding company required to be established by such company, or any subsidiary bank of such company undergoes a change in control after the date of enactment of the Financial Stability Improvement Act of 2009, other than (I) the merger or whole acquisition of such parent company in a bona fide merger or acquisition (as shall be determined by the Board, which is authorized to find that a transaction is not a bona fide merger or acquisition and thus results in the loss of exemption), with a company that is predominantly engaged in activities not permissible for a financial holding company pursuant to section 4(k), or (II) the acquisition of additional shares by a company that owned or controlled 7.5 percent or more of any class of such parent companys outstanding voting stock on or before June 30, 2009, and continuously owned or controlled at least such 7.5 percent since June 30, 2009. (ii) Nothing in this Paragraph (C) shall be construed as preventing the Board from requiring compliance with this subsection, section 6 or the requirements of the Change in Bank Control Act (12 U.S.C. 1817(j)), as applicable to a company that is permitted to acquire control without loss of the exemption in this subsection 4(p)(2); or
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(D) any subsidiary bank of such company engages in any activity after the date of enactment of the Financial Stability Improvement Act of 2009 which would have caused such institution to be a bank (as defined in section 2(c) of this Act, as in effect before such date) if such activities had been engaged in before such date. (3) DIVESTITURE IN CASE OF LOSS OF EXEMPTION. If any company described in paragraph (1) fails to qualify for the exemption provided under paragraph (1) by operation of paragraph (2), such exemption shall cease to apply to such company and such company shall divest control of each bank it controls before the end of the 180-day period beginning on the date on which the company receives notice from the Board that the company has failed to continue to qualify for such exemption, unless, before the end of such 180-day period, the company has (A) either (i) corrected the condition or ceased the activity that caused the company to fail to continue to qualify for the exemption; or (ii) submitted a plan to the Board for approval to cease the activity or correct the condition in a timely manner (which shall not exceed 1 year); and (B) implemented procedures that are reasonably adapted to avoid the reoccurrence of such condition or activity.
104 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Act;
(4) SUBSECTION CEASES TO APPLY UNDER CERTAIN CIRCUMSTANCES. This subsection shall cease to apply to any company described in paragraph (1) if such company (A) registers as a bank holding company under section 2(a) of this
(B) immediately upon such registration, complies with all of the requirements of this chapter, and regulations prescribed by the Board pursuant to this chapter, including the nonbanking restrictions of this section; and (C) does not, at the time of such registration, control banks in more than one State, the acquisition of which would be prohibited by section 3(d) of this Act if an application for such acquisition by such company were filed under section 3(a) of this Act. (5) INFORMATION REQUIREMENT. Each company described in paragraph (1) shall, within 60 days after the date of enactment of the Financial Stability Improvement Act of 2009, provide the Board with the name and address of such company, the name and address of each bank such company controls, and a description of each such banks activities. (6) EXAMINATIONS AND REPORTS. The Board may, from time to time, examine a company described in paragraph (1) or a bank controlled by such a company, and may require reports under oath from a company described in paragraph (1), and appropriate officers or directors of such company, in each case
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solely for purposes of assuring compliance with the provisions of this subsection and enforcing such compliance. (7) LIMITED ENFORCEMENT (A) IN GENERAL. In addition to any other power of the Board, the Board may enforce compliance with the provisions of this subsection which are applicable to any company described in paragraph (1), and any bank controlled by such company, under section 8 of the Federal Deposit Insurance Act, and such company or bank shall be subject to such section (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 described in paragraph (1) or any bank controlled by such a 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) SECTION SIX HOLDING COMPANIES. The Bank Holding Company Act (12 U.S.C. 1841 et seq.) is amended by inserting after section 5 the following new section: SEC. 6. SPECIAL-PURPOSE HOLDING COMPANIES. (a) ESTABLISHMENT, PURPOSE AND REQUIREMENTS OF SPECIAL PURPOSE HOLDING
COMPANIES.
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(1) REQUIREMENT. A section six holding company shall be established and maintained by a company-(A) described in section 4(f)(1) as required by section 4(f)(2)(D) of this Act; (B) described in section 4(p)(1) as required by section 4(p)(2)(A) of this Act; or (C) that (i) is subject to heightened prudential standards under Subtitle B of the Financial Stability Improvement Act of 2009; (ii) is not (I) a bank holding company, or (II) subject to the Bank Holding Company Act by reason of section 8(a) of the International Banking Act of 1978 (12 U.S.C. 3106(a)); and (ii) that directly or indirectly controlled shares or engaged in activities that did not, on the date the company is first subject to heightened prudential standards pursuant to subtitle B of the Financial Stability Improvement Act of 2009, comply with the activity or investment restrictions on financial holding companies in section 4 in accordance with regulations prescribed by the Board. (2) PURPOSE. (A) A company that is required to form a section six holding company shall conduct all of its activities that are determined to be financial in nature or incidental thereto under section 4(k) and shall hold any shares of a bank or
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insured depository institution controlled by such company, through the section six holding company, unless the Board specifically determines otherwise in accordance with paragraph (6). (B) A section six holding company shall be prohibited from conducting any activities or investing in any companies other than those permissible for a financial holding company under section 4, unless the Board specifically determines otherwise in accordance with paragraph (6). (3) REGISTRATION. (A) A section six holding company required to be established by a company described in subparagraph (1)(A) shall be established, and such company shall register with the Board as a bank holding company, pursuant to the requirements in section 4(f). (B) A section six holding company required to be established by a company described in subparagraph (1)(B) shall be established, and such company shall register with the Board as a bank holding company, pursuant to the requirements in section 4(p). (C) A section six holding company required to be established by a company described in paragraph (1)(C) shall be (i) established, and such company shall register with the Board, as a bank holding company within 90 days after such company or such companys parent holding company has been notified by the Board that such company is subject to heightened prudential standards under Subtitle B of the Financial Stability Improvement Act of 2009, unless the Board
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grants an extension of such period for compliance which shall not exceed 180 additional days; (ii) treated as a financial holding company under this Act; and (iii) subject to the authority of the Board to enforce compliance with the provisions of this section under section 8 of the Federal Deposit Insurance Act in the same manner and to the same extent as if such company were a bank holding company. (4) RULE OF CONSTRUCTION For purposes of this section, designation of an already established intermediate holding company that will serve as the section six holding company shall satisfy the requirement to establish a section six holding company, provided that such existing intermediate holding company complies with all other provisions applicable to a section six holding company. (5) LIMITATIONS ON AUTHORITY OF COMMERCIAL PARENT.A company that is not a bank holding company or treated as a bank holding company pursuant to section 8(a) of the International Bank Act of 1978 that has been notified that it is an identified financial holding company, pursuant to subtitle A of the Financial Stability Improvement Act of 2009, shall (A) not be deemed to be, or treated as, a bank holding company, solely because of its ownership or control of a section six holding company; and, (B) not be subject to this Act, except for such provisions as are explicitly made applicable in this section. (6) BOARD AUTHORITY.
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(A) RULES AND EXEMPTIONS. In addition to any other authority of the Board, the Board may, at its discretion, prescribe rules and regulations or issue orders regarding: (i) the establishment and operation of section six holding companies; (ii) exemptions from the requirement to conduct all activities that are financial or incidental thereto, as defined in section 4(k), through the section six holding company if such exemption (I) would not threaten the safety and soundness of the section six holding company or any subsidiary of the section six holding company; (II) would not increase systemic risk or threaten the stability of the overall financial system; and (III) would not result in unfair competitive advantage to the parent company of such section 6 holding company; and (iii) exemptions from the affiliate transaction requirements of subsection (b) if such exemption (I) is consistent with the purposes of this section, and section 23A and section 23B of the Federal Reserve Act; (II) would not threaten the safety and soundness of the section six holding company or any subsidiary of the section six holding company;
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(III) would not increase systemic risk or threaten the stability of the overall financial system; and (IV) would not result in unfair competitive advantage to the parent company of such section 6 holding company. (B) PARENT COMPANY REPORTS. The Board may, from time to time, require reports under oath from a company that controls a section six holding company, and appropriate officers or directors of such company, solely for purposes of ensuring compliance with the provisions of this section (including assessing the companys ability to serve as a source of financial strength pursuant to subsection (g)) and enforcing such compliance. (C) LIMITED PARENT COMPANY ENFORCEMENT (i) IN GENERAL. In addition to any other power of the Board, the Board may enforce compliance with the provisions of this subsection which are applicable to any company described in paragraph (1), and any bank controlled by such company, under section 8 of the Federal Deposit Insurance Act and such company or bank shall be subject to such section (for such purposes) in the same manner and to the same extent as if such company were a bank holding company. (ii) APPLICATION OF OTHER ACT Any violation of this subsection by any company that controls a section six holding company or any bank controlled by such a company, may also be treated as a violation of the Federal Deposit Insurance Act for purposes of clause (i).
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(iii) NO EFFECT ON OTHER AUTHORITY. No provision of this subparagraph shall be construed as limiting any authority of the Board or any other Federal agency under any other provision of law.. (b) RESTRICTIONS ON AFFILIATE TRANSACTIONS. (1) SECTION 23A AND 23B APPLICABILITY. (A) IN GENERAL. Transactions between a section six holding company established under this section (including any subsidiary of such company) and any affiliate of such company that is not a subsidiary of the section six holding company shall be subject to the restrictions and limitations contained in section 23A and section 23B of the Federal Reserve Act as if the section six holding company were a member bank. (B) COVERED TRANSACTIONS. (i) A depository institution controlled by a section six holding company may not engage in a covered transaction (as defined in section 23A(b)(7) of the Federal Reserve Act) with any affiliate that is not the section six holding company or a subsidiary of the section six holding company. (i) For purposes of this subparagraph (B), any transaction by a depository institution controlled by a section six holding company with any person shall be deemed to be a transaction with an affiliate that is not the section six holding company or a subsidiary of the section six holding company to the extent that the
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proceeds of the transaction are used for the benefit of, or transferred to, that affiliate. (2) RULE OF CONSTRUCTION.No provision of this subsection shall be construed as exempting any subsidiary insured depository institution of a section six holding company from compliance with section 23A or 23B of the Federal Reserve Act with respect to each affiliate of such institution (as defined in section 23A or 23B of the Federal Reserve Act), including any affiliate that is the section six holding company or subsidiary of the section six holding company. (c) TYING
PROVISIONS.
A company that directly or indirectly controls a section six
holding company shall be (1) treated as a bank holding company for purposes of section 106 of the Bank Holding Company Act Amendments of 1970 and section 22(h) of the Federal Reserve Act and any regulation prescribed under any such section; and (2) subject to the restrictions of section 106 of the Bank Holding Company Act Amendments of 1970, in connection with any transaction involving the products or services of such company or affiliate and those of a bank affiliate, as if such company or affiliate were a bank and such bank were a subsidiary of a bank holding company. (d) CROSS MARKETING RESTRICTIONS APPLICABLE TO COMMERCIAL ACTIVITIES(1) IN GENERAL- A section six holding company shall not-(A) offer or market, directly or through any arrangement, any product or service of an affiliate that is not a subsidiary of the section six holding company; or
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(B) permit any of the products or services of the section six holding company or any subsidiary thereof to be offered or marketed, directly or through any arrangement, by or through any affiliate that is not a subsidiary of the section six holding company. (2) BOARD AUTHORITY TO GRANT EXEMPTIONS. The Board may grant exemptions from the restrictions in this subsection if-(A) the arrangement does not violate section 106 of the Bank Holding Company Act Amendments of 1970; and (B) the Board determines that the arrangement is in the public interest, does not undermine the separation of banking and commerce, and is consistent with the safety and soundness of the section six holding company. (e) FINANCIAL HOLDING COMPANY REQUIREMENTS. A section six holding company shall be subject to (A) the conditions for engaging in expanded financial activities in section 4(l); and (B) the provisions applicable to financial holding companies that fail to meet certain requirements in section 4(m). (f) INDEPENDENCE OF SECTION SIX HOLDING COMPANY. (1) No less than 25 percent of the members of the board of directors of a section six holding company, and each subsidiary of a section six holding company shall be independent of the parent company of the section six holding company and any subsidiary of such parent company. For purposes of this subsection, a director shall be independent of the parent company if such person is not currently serving, and has not within the previous two-year period served, as a director, officer, or employee of any
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affiliate of the section six holding company that is not a subsidiary of the section six holding company. (2) No executive officer of a section six holding company or any subsidiary of a section six holding company may serve as a director, officer, or employee of an affiliate of the section six holding company that is not a subsidiary of the section six holding company. (3) The Board shall issue regulations that require effective legal and operational separation of the functions of a section six holding company from its affiliates that are not subsidiaries of such section six holding company. (g) SOURCE OF STRENGTH. A company that directly or indirectly controls a section six holding company shall serve as a source of financial strength to its subsidiary section six holding company. (d) CONFORMING CHANGES. Section 4(h) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(h)), is amended (1) in paragraph (1), by striking subparagraph (D), (F), (G), or (H) and inserting subparagraph (C) or (D); and (2) in paragraph (2), by striking subparagraph (D), (F), (G), or (H) and inserting subparagraph (C) or (D) . SEC. 1302. REGISTRATION OF CERTAIN COMPANIES AS BANK HOLDING COMPANIES. Section 5 of the Bank Holding Company Act of 1956 (12 U.S.C. 1844) is amended by inserting at the end the following new subsection: (h) CONVERSION TO BANK HOLDING COMPANY BY OPERATION OF LAW.
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(1) CONVERSION BY OPERATION OF LAW.A company that, on the day before the date of enactment of the Financial Stability Improvement Act of 2009, was not a bank holding company but which, by reason of sections 4(p) and 6 becomes a bank holding company by operation of law, shall register as a bank holding company with the Board in accordance with section 5(a) within 90 days of the date of enactment of that Act. (2) COMPLIANCE WITH BANK HOLDING COMPANY ACT.With respect to any company described in paragraph (1), the Board may grant temporary exemptions or provide other appropriate temporary relief to permit such company to implement measures necessary to comply with the requirements under the Bank Holding Company Act.. SEC. 1303. REPORTS AND EXAMINATIONS OF BANK HOLDING COMPANIES; REGULATION OF FUNCTIONALLY REGULATED SUBSIDIARIES. (a) REPORTS OF BANK HOLDING COMPANIES.Sections 5(c)(1)(A) and (B) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(1)(A) and (B)) are amended to read as follows: (A) IN GENERAL. The Board, from time to time, may require a bank holding company and any subsidiary of such company to submit reports under oath that the Board determines are necessary or appropriate for the Board to carry out the purposes of this chapter, prevent evasions thereof, and monitor compliance by the company or subsidiary with the applicable provisions of law. (B) USE OF EXISTING REPORTS. (i) IN GENERAL.The Board shall, to the fullest extent possible, use:
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(I) reports that a bank holding company or any subsidiary of such company has been required to provide to other Federal or State regulatory agencies; (II) information that is otherwise required to be reported publicly; and (III) externally audited financial statements. (ii) AVAILABILITY.A bank holding company or a subsidiary of such company shall promptly provide to the Board, at the request of the Board, a report referred to in clause (i)(I).. (b) FUNCTIONALLY REGULATED SUBSIDIARY.Section 5(c)(1) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(1)) is amended by inserting at the end the following new subparagraph: (C) DEFINITION.For purposes of this subsection and section 6, the term functionally regulated subsidiary means any subsidiary (other than a depository institution) of a bank holding company that is (i) a broker or dealer registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934, for which the Securities and Exchange Commission is the Federal regulatory agency; (ii) an investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940, for which the Securities and Exchange Commission is the Federal regulatory agency;
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(iii) an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940, for which the Securities and Exchange Commission is the Federal regulatory agency, with respect to the investment advisory activities of such investment adviser and activities incidental to such investment advisory activities; and (iv) a futures commission merchant, commodity trading advisor, and commodity pool operator registered with the Commodity Futures Trading Commission under the Commodity Exchange Act, for which the Commodity Futures Trading Commission is the Federal regulatory agency, with respect to the commodities activities of such entity and activities incidental to such commodities activities.. (c) EXAMINATIONS OF BANK HOLDING COMPANIES. Sections 5(c)(2)(A) and (B) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(2)(A) and (B)) are amended to read as follows: (A) IN GENERAL. The Board may make examinations of a bank holding company and any subsidiary of such a company to carry out the purposes of this chapter, prevent evasions thereof, and monitor compliance by the company or subsidiary with applicable provisions of law. (B) FUNCTIONALLY REGULATED AND DEPOSITORY INSTITUTION SUBSIDIARIES. The Board shall, to the fullest extent possible, use reports of examination of functionally regulated subsidiaries and
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subsidiary depository institutions made by other Federal or State regulatory authorities.. (d) REGULATION OF FINANCIAL HOLDING COMPANIES. Section 5(c)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)) is amended by striking subparagraphs (C), (D), and (E). (e) 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 by striking section 10A (12 U.S.C. 1848a) in its entirety. SEC. 1304. REQUIREMENTS FOR FINANCIAL HOLDING COMPANIES TO REMAIN WELL CAPITALIZED AND WELL MANAGED 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; (2) by redesignating subparagraph (C) as subparagraph (D); (3) by inserting after subparagraph (B) the following new subparagraph: (C) the bank holding company is well capitalized and well managed; and; and (4) in subparagraph (D)(as so redesignated) by striking clause (ii) and inserting the following new clause: (ii) a certification that the company meets the requirements of subparagraphs A through C.. SEC. 1305. STANDARDS FOR INTERSTATE ACQUISITIONS.
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(a) BANK HOLDING COMPANY ACT OF 1956 AMENDMENT. Section 3(d)(1)(A) of the Bank Holding Company Act of 1956 (12 U.S.C. 1842(d)(1)(A)) is amended (1) by striking adequately capitalized and inserting well capitalized; and (2) by striking adequately managed and inserting well managed. (b) FEDERAL DEPOSIT INSURANCE ACT AMENDMENT. Section 44(b)(4)(B) of the Federal Deposit Insurance Act (12 U.S.C. 1831u(b)(4)(B)) is amended to read as follows: (B) the responsible agency determines that the resulting bank will be well capitalized and well managed upon the consummation of the transaction.. SEC. 1306. ENHANCING EXISTING RESTRICTIONS ON BANK TRANSACTIONS WITH AFFILIATES. (a) Section 23A of the Federal Reserve Act (12 U.S.C. 371c), is amended (1) in subsection (b)(1), by striking subparagraph (D) and inserting the following new subparagraph: (D) any investment fund with respect to which a member bank or affiliate thereof is an investment adviser; and (2) in subsection (b)(7)(A), by inserting (including a purchase of assets subject to an agreement to repurchase) after affiliate; (3) in subsection (b)(7)(C), by striking , including assets subject to an agreement to repurchase,; (4) in subsection (b)(7)(D) (A) by inserting or other debt obligations after acceptance of securities, and (B) by striking or after the semicolon;
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(5) in subsection (b)(7), by inserting at the end the following new subparagraphs: (F) any securities borrowing and lending transactions with an affiliate to the extent that the transactions create credit exposure of the member bank to the affiliate; or (G) current and potential future credit exposure to the affiliate on derivative transactions with the affiliate;; (6) in subsection (c)(1), by striking at the time of the transaction, and inserting at all times; (7) in subsection (c) (A) by striking paragraph (2); (B) by redesignating paragraphs (3), (4), and (5) as paragraphs (2), (3), and (4), respectively; (8) in subsection (c)(3) (as so redesignated by paragraph (7)), by inserting or other debt obligations after securities; (9) in subsection (f)(2), by inserting at the end the following: The Board may not, by regulation or order, grant an exemption under this section unless the Board obtains the concurrence of the Chairman of the Federal Deposit Insurance Corporation.; and (10) in subsection (f) (A) by redesignating paragraph (3) as paragraph (4); (B) and inserting after paragraph (2) the following new paragraph: (3) CONCURRENCE OF THE COMPTROLLER OF THE CURRENCY. With respect to a transaction or relationship involving a national bank or Federal savings
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association, the Board may not grant an exemption under this section unless the Board obtains the concurrence of the Comptroller of the Currency (in addition to obtaining the concurrence of the Chairman of the Federal Deposit Insurance Corporation under paragraph (2)).. (b) TECHNICAL AND CONFORMING AMENDMENT. Section 23B(e) of the Federal Reserve Act (12 U.S.C. 371-1(e)), is amended by inserting at the end the following new paragraph: (3) The Board may not grant an exemption or exclusion under this section unless the Board obtains the concurrence of the Chairman of the Federal Deposit Insurance Corporation.. SEC. 1307. ELIMINATING EXCEPTIONS FOR TRANSACTIONS WITH FINANCIAL SUBSIDIARIES. Section 23A(e) of the Federal Reserve Act (12 U.S.C. 371c(e)) is amended by (1) striking paragraph (3); (2) redesignating paragraph (4) as paragraph (3). SEC. 1308. LENDING LIMITS APPLICABLE TO CREDIT EXPOSURE ON DERIVATIVE TRANSACTIONS, REPURCHASE AGREEMENTS, REVERSE REPURCHASE AGREEMENTS, AND SECURITIES LENDING AND BORROWING TRANSACTIONS. Section 5200 of the Revised Statutes of the United States (12 U.S.C. 84) is amended (1) in subsection (b)(1), by striking shall include all direct or indirect and all that follows in that paragraph through commitment; and inserting: shall include
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(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, such term shall also include any liability of a national banking association to advance funds to or on behalf of a person pursuant to a contractual commitment; and (C) 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 subsection (b)(2) by striking the period at the end and inserting ; and (3) in subsection (b), by inserting after paragraph (2) the following new paragraph: (3) the term derivative transaction means 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.; and (4) in subsection (d), by inserting after paragraph (2) the following new paragraph: (3) The Comptroller of the Currency shall prescribe rules to administer and carry out the purposes of this section with respect to credit exposures arising from any derivative transaction, repurchase agreement, reverse repurchase agreement, securities
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lending transaction, or securities borrowing transaction. Rules required to be prescribed under this paragraph (3) shall take effect, in final form, not later than 180 days after the date of enactment of the Financial Stability Improvement Act of 2009.. SEC. 1309. APPLICATION OF NATIONAL BANK LENDING LIMITS TO INSURED STATE BANKS. Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is amended by adding at the end a new subsection: (y) APPLICATION OF LENDING LIMITS TO INSURED STATE BANKS.Section 84 of this title shall apply to every insured depository institution in the same manner and to the same extent as if the insured depository institution were a national banking association.. SEC. 1310. RESTRICTION ON CONVERSIONS OF TROUBLED BANKS. (a) CONVERSION OF A NATIONAL BANKING ASSOCIATION TO A STATE BANK.The National Bank Consolidation and Merger Act (12 U.S.C. 215, et seq.) is amended by adding a new section 7 and renumbering accordingly: SEC. 7. PROHIBITION ON CERTAIN CONVERSIONS. A national bank may not convert to a State bank during any period of time in which it is subject to a Cease and Desist order, memorandum of understanding, or other enforcement action entered into with or issued by the Comptroller of the Currency.; and (b) CONVERSION OF A STATE BANK TO A NATIONAL BANK.Section 5154 of the Revised Statutes (12 U.S.C. 35) is amended by adding at the end the following new sentence: The Comptroller of the Currency shall not approve the conversion of a State bank to a national bank during any period of time in which the State bank is subject to a Cease and Desist order, memorandum of understanding, or other enforcement action
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entered into or issued by a State bank supervisor, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System or a Federal Reserve Bank.. SEC. 1311. LENDING LIMITS TO INSIDERS. Section 22(h)(9)(D)(ii) of the Federal Reserve Act (12 U.S.C. 375b(h)(9)(D)(ii)) is amended by inserting , except that a member bank shall be deemed to have extended credit to a person if the member bank has credit exposure to the person arising from a derivative transaction, repurchase agreement, reverse repurchase agreement, securities lending transaction, or securities borrowing transaction between the member bank and the person. before the period at the end. SEC. 1312. LIMITATIONS ON PURCHASES OF ASSETS FROM INSIDERS. (a) Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is amended by inserting after subsection (y) (as added by section 1408) the following new subsection: (z) GENERAL PROHIBITION.An insured depository institution shall not purchase an asset from, or sell an asset to, one of its executive officers, directors, or principal shareholders or any related interest of such person (as such terms are defined in 22(h) of Federal Reserve Act) unless the transaction is on market terms and, if the transaction represents more than 10 percent of the institutions capital stock and surplus, the transaction has been approved in advance by a majority of the institutions board of directors (with interested directors of the insured depository institution not participating in the approval of the transaction).. (b) FDIC RULEMAKING AUTHORITY.The Federal Deposit Insurance Corporation may prescribe rules to implement the requirements of section (a).
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(c) AMENDMENTS TO THE FEDERAL RESERVE ACT. Section 22 of the Federal Reserve Act (12 U.S.C. 375) is amended by striking subsection (d). SEC. 1313. RULES REGARDING 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 by inserting , including regulations relating to the capital levels of bank holding companies before the period at the end. SEC. 1314. ENHANCEMENTS TO FACTORS TO BE CONSIDERED IN CERTAIN ACQUISITIONS. (a) BANK ACQUISITIONS. Section 3(c) of the Bank Holding Company Act of 1956 (12 U.S.C. 1842(c)) is amended by inserting at the end the following new paragraph: (7) FINANCIAL STABILITY.In every case, the Board shall take into consideration the extent to which the proposed acquisition, merger, or consolidation may pose risk to the stability of the United States financial system or the economy of the United States.. (b) NONBANK ACQUISITIONS. (i) Section 4(j)(2)(A) of the Bank Holding Company is amended by (1) striking or before unsound banking practices; and (2) inserting before the period at the end , or risk to the stability of the United States financial system or the economy of the United States. (ii) Section 4(k)(6) of the Bank Holding Company Act is amended by striking subparagraph (B) and inserting the following new subparagraph: (B) A financial holding company may commence any activity or acquire any company, pursuant to paragraph (4) or any regulation
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prescribed or order issued under paragraph (5), without prior approval of the Board, except (i) for a transaction in which the total assets to be acquired by the financial holding company exceed $25 billion, and (ii) as provided in subsection (j) with regard to the acquisition of a savings association.. (c) BANK MERGER ACT TRANSACTIONS. Section 8(c)(5) of the Federal Deposit Insurance Act (12 U.S.C. 1828(c)(5)) is amended by (1) striking and before the convenience and needs of the community to be served and inserting before the period at the end , and the risk to the stability of the United States financial system and the economy of the United States. SEC. 1315 ELIMINATION OF ELECTIVE INVESTMENT BANK HOLDING COMPANY FRAMEWORK Section 17 of the Securities Exchange Act of 1934 (15 U.S.C. 78q) is amended by striking subsection (i) in its entirety and redesignating the following subsections accordingly. SEC. 1316. EXAMINATION FEES FOR LARGE BANK HOLDING COMPANIES. The Bank Holding Company Act is amended by adding a new section 5A: SEC. 5A. EXAMINATION FEES. The Board of Governors of the Federal Reserve System or the Federal Reserve Banks shall assess fees on bank holding companies with total consolidated assets of $10 billion or
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more. Such fees shall be sufficient to defray the cost of the examination of such bank holding companies..
SUBTITLE EPAYMENT, CLEARING, AND SETTLEMENT SUPERVISION

SEC. 1401. SHORT TITLE. This subtitle may be cited as the Payment, Clearing, and Settlement Supervision Act of
(1) The proper functioning of the financial markets is dependent upon safe and efficient arrangements for the clearing 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 to provide consistency, to promote robust risk management and safety and soundness, to reduce systemic risks, and
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to support the stability of the broader financial system. (b) PURPOSES.The purposes of this subtitle are to mitigate systemic risk in the financial system and promote financial stability by (1) authorizing the Board of Governors of the Federal Reserve System to prescribe uniform standards for the management of risks by systemically important financial market utilities and for the conduct of systemically important payment, clearing and settlement activities by financial institutions; (2) providing for appropriate supervision and enforcement of such risk management standards for systemically important financial market utilities and payment, clearing, and settlement activities; and (3) strengthening the liquidity of systemically important financial market utilities. SEC. 1403. DEFINITIONS. For purposes of this subtitle, 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) APPROPRIATE FINANCIAL REGULATOR.The term appropriate financial regulator means (A) The Comptroller of the Currency, with respect to (i) any national banks or a Federal branch or Federal agency of a foreign bank; and (ii) after the functions of the Director of the Office of Thrift Supervision are transferred under subtitle C, any Federal savings association.
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(B) the Board of Directors of the Corporation, with respect to (i) any insured State nonmember bank or any insured branch of a foreign bank (other than a Federal branch); and (ii) after the functions of the Director of the Office of Thrift Supervision are transferred under subtitle C, any State savings association. (C) The Director of the Office of Thrift Supervision, with respect to any savings association and any savings and loan holding company, until the functions of the Director of the Office of Thrift Supervision are transferred under subtitle C. (D) The Board, with respect to (i) any State member bank; (ii) any branch or agency of a foreign bank (other than any Federal branch, Federal agency, or insured State branch of a foreign bank); (iii) any commercial lending company owned or controlled by a foreign bank; (iv) any organization operating under section 25 or 25A of the Federal Reserve Act (12 U.S.C. 601 et seq. or 611 et seq.); (v) any bank holding company and any non-depository subsidiary of a bank holding company (other than any broker, dealer, investment company, or investment adviser registered with the Securities and Exchange Commission, or any futures commission merchant, commodity trading advisor, or commodity pool operator registered with the Commodity Futures Trading Commission); and (vi) after the functions of the Director of Thrift Supervision are
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transferred under subtitle C, any savings and loan holding company and any non-depository subsidiary of a savings and loan holding company (other than any broker, dealer, investment company, or investment adviser registered with the Securities and Exchange Commission, or any futures commission merchant, commodity trading advisor, or commodity pool operator registered with the Commodity Futures Trading Commission). (E) The National Credit Union Administration Board, with respect to any insured credit union under the Federal Credit Union Act (12 U.S.C. 1751 et seq.). (F) The Securities and Exchange Commission, with respect to (i) any broker or dealer registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.); (ii) any investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.); and (iii) any investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.). (G) The Commodity Futures Trading Commission, with respect to futures commission merchants, commodity trading advisors, and commodity pool operators registered with the Commodity Futures Trading Commission under the Commodity Exchange Act (7 U.S.C. 1 et seq.).
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(H) The State insurance authority of the state in which an insurance company is domiciled, with respect to any financial institution engaged in providing insurance under State insurance law. (I) The Board, with respect to any other financial institution engaged in an identified activity. (3) BOARD.The term Board means the Board of Governors of the Federal Reserve System. (4) CORPORATION.The term Corporation means the Federal Deposit Insurance Corporation. (5) FINANCIAL INSTITUTION.The term financial institution means an entity other than a financial market utility that is (A) a depository institution (as defined in section 3 of the Federal Deposit Insurance Act) (12 U.S.C. 1813); (B) 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); (C) an organization operating under section 25 or 25A of the Federal Reserve Act (12 U.S.C. 601 et seq. and 611 et seq.); (D) a credit union (as defined in section 101 of the Federal Credit Union Act) (12 U.S.C. 1752); (E) a broker or dealer (as defined in section 3 of the Securities Exchange Act of 1934) (15 U.S.C. 78c); (F) an investment company (as defined in section 3 of the Investment Company Act of 1940) (15 U.S.C. 80a-3);
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(G) an insurance company (as defined in section 2 of the Investment Company Act of 1940) (15 U.S.C. 80a-2); (H) an investment adviser (as defined in section 202 of the Investment Advisers Act of 1940) (15 U.S.C. 80b-2); (I) 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 (J) 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)). (6) FINANCIAL MARKET UTILITY.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. (7) IDENTIFIED ACTIVITY.The term identified activity means a payment, clearing, or settlement activity that the Council has identified as systemically important under section 1404. (8) IDENTIFIED FINANCIAL MARKET UTILITY.The term identified financial market utility means a financial market utility that the Council has identified as systemically important under section 1404. (9) PAYMENT, CLEARING, OR SETTLEMENT ACTIVITY. (A) IN GENERAL. The term payment, clearing, or settlement activity means one of the following activities carried out by one or more financial
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institutions after the parties to a financial transaction agree to the transaction to facilitate the completion of the financial transaction: the calculation and communication of unsettled financial transactions between financial institutions; netting or aggregating of financial transactions; provision and maintenance of trade, contract, or instrument information; the management of risks associated with unsettled financial transactions; transmittal and storage of payment instructions; movement of funds; final settlement of financial transactions; and other similar activities that the Board may determine by rule or order. Payment, clearing, or settlement activity does not include, among other things, activities inclusive of or prior to trade execution. (B) FINANCIAL TRANSACTION. For purposes of subparagraph (A), the term financial transaction means a funds transfer, securities contract, contract of sale of a commodity for future delivery, forward contract, repurchase agreement, swap agreement, foreign exchange contract, financial derivatives contract, and any similar transaction that the Board determines, by rule or order, to be a financial transaction for purposes of this subtitle. (10) PERSON.The term person means any corporation, company, association, firm, partnership, society, joint stock company, or other legal entity other than a natural person. (11) SECRETARY.The term Secretary means the Secretary of the Treasury. (12) 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
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(13) SUPERVISORY AGENCY.The term Supervisory Agency means the Federal agency that has primary jurisdiction over an identified financial market utility under Federal banking, securities, or commodity futures laws, including (A) the Securities and Exchange Commission, with respect to an identified financial market utility that is a clearing agency registered with the Securities and Exchange Commission; (B) the Commodity Futures Trading Commission, with respect to an identified financial market utility that is a derivatives clearing organization registered with the Commodity Futures Trading Commission; (C) the Board of Directors of the Corporation, with respect to an identified financial market utility that is (i) an insured State nonmember bank or an insured branch of a foreign bank; and (ii) after the functions of the Director of the Office of Thrift Supervision are transferred under subtitle C, a State savings association; (D) the Comptroller of the Currency, with respect to an identified financial market utility that is (i) a national bank or a Federal branch (other than an insured branch) or a Federal agency of a foreign bank; and (ii) after the functions of the Director of the Office of Thrift Supervision are transferred under subtitle C, a Federal savings association; (E) the Board, with respect to an identified financial market utility that
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(ii) a branch or agency of a foreign bank (other than any Federal branch, Federal agency, or insured State branch of a foreign bank); (iii) a commercial lending company owned or controlled by a foreign bank; (iv) an organization operating under section 25 or 25A of the Federal Reserve Act (12 U.S.C. 601 et seq. or 611 et seq.); (v) a bank holding company and any non-depository subsidiary of a bank holding company (other than any broker, dealer, investment company, or investment adviser registered with the Securities and Exchange Commission, or any futures commission merchant, commodity trading advisor, or commodity pool operator registered with the Commodity Futures Trading Commission); and (vi) after the functions of the Director of the Office of Thrift Supervision are transferred under subtitle C, any savings and loan holding company and any non-depository subsidiary of a savings and loan holding company (other than any broker, dealer, investment company, or investment adviser registered with the Securities and Exchange Commission, or any futures commission merchant, commodity trading advisor, or commodity pool operator registered with the Commodity Futures Trading Commission); and (F) the Director of the Office of Thrift Supervision, with respect to an
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identified financial market utility that is a savings association or a savings and loan holding company, until the functions of the Director of the Office of Thrift Supervision are transferred under subtitle C. If a financial market utility is subject to supervision by more than one agency listed in paragraphs (A) through (F), and those agencies cannot agree which has primary jurisdiction, the Council shall decide which agency is the Supervisory Agency for purposes of this subtitle. (14) SYSTEMICALLY IMPORTANT AND SYSTEMIC IMPORTANCE.The terms systemically important and systemic importance mean a situation in which 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, credit, or other problems spreading among financial institutions or markets and thereby threaten the stability of the financial system. SEC. 1404. IDENTIFICATION OF SYSTEMICALLY IMPORTANT FINANCIAL MARKET UTILITIES AND PAYMENT, CLEARING, AND SETTLEMENT ACTIVITIES (a) IN GENERAL. The Council shall, at its own initiative or at the request of the Board, consider whether to identify a financial market utility or a payment, clearing, or settlement activity as systemically important. (b) CRITERIA FOR IDENTIFICATION. The Council shall identify a financial market utility or payment, clearing, or settlement activity if the Council determines that such financial market utility or activity is, or is likely to become, systemically important, based on consideration of the following:
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(1) The aggregate monetary value of the transactions processed by the financial
market utility or carried out through the payment, clearing, or settlement activity. (2) The aggregate exposure of counterparties to the financial market utility. (3) 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. (4) 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. (5) Any other factors that the Council deems appropriate.
(c) PERIODIC REVIEW AND RESCISSION OF IDENTIFICATIONS. The Council shall, at its own initiative or at the request of the Board (1) review periodically whether a financial market utility or a payment, clearing, or settlement activity continues to be systemically important; and (2) rescind identification of a financial market utility or a payment, clearing, or settlement activity that it determines no longer should be identified. (d) PROCEDURE FOR IDENTIFYING OR RESCINDING A SYSTEMICALLY IMPORTANT IDENTIFICATION. (1) CONSULTATION. Before making any determination under this section, the Council shall consult with the Board, and in the case of a determination regarding identification or rescission of identification of a financial market utility, the Council shall consult with the relevant Supervisory Agency. (2) NOTICE AND OPPORTUNITY FOR CONSIDERATION OF WRITTEN MATERIALS. (A) IN GENERAL. The Board shall, in an executive capacity on behalf of
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the Council, provide notice to a financial market utility or, in the case of a payment, clearing, or settlement activity, financial institutions, that the Council is considering whether to identify or cease to identify such financial market utility or such payment, clearing, or settlement activity, including an explanation of the basis of the Councils consideration, and provide such financial market utilities or financial institutions 30 days to submit written materials to inform the Councils decision. The Council shall make its decision, and the Board shall notify the financial market utility or financial institutions of the Councils decision, within 60 days of the due date for such written materials. (B) EMERGENCY EXCEPTION. The Council may waive or modify the requirements of subparagraph (B) if the Council determines that the waiver or modification is necessary or appropriate to prevent or mitigate an immediate threat to financial stability posed by the financial market utility or the payment, clearing, or settlement activity. The Board shall, in an executive capacity on behalf of the Council, notify the financial market utility concerned or, in the case of a payment, clearing, or settlement activity, 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. (3) FORM OF NOTIFICATION. The Board shall, in an executive capacity on behalf of the Council, provide notice of a decision under this section regarding (A) a financial market utility to such financial market utility by order; and (B) a payment, clearing, or settlement activity to financial institutions by posting a notice on the Boards web site and by publishing a notice in the Federal
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SEC. 1405. STANDARDS FOR SYSTEMICALLY IMPORTANT FINANCIAL MARKET UTILITIES AND PAYMENT, CLEARING, OR SETTLEMENT ACTIVITIES. (a) BOARD REQUIREMENT TO PRESCRIBE STANDARDS.The Board shall, by regulation or order and in consultation with the Council and relevant supervisory agencies, prescribe or issue risk management standards governing the operations of identified financial market utilities and the conduct of identified activities by financial institutions, taking into consideration relevant international standards and existing prudential requirements applicable to such financial market utilities and payment, clearing, or settlement activities. (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. (1) IN GENERAL.The standards prescribed under subsection (a) may address areas such as risk management policies and procedures; margin and collateral requirements; participant or counterparty default policies and procedures; the ability to complete timely clearing and settlement of financial transactions; capital and financial resource requirements for identified financial market utilities; and other areas that the Board determines, by rule or order, are necessary to achieve the objectives and principles
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(2) INTERACTION WITH EXISTING STANDARDS. The standards prescribed under this section may (A) be different than existing standards that address the same or similar subject areas; and (B) may address subject areas that are not covered by existing regulations. (3) THRESHOLD LEVEL.The standards prescribed under subsection (a) governing the conduct of identified activities 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. (4) CATEGORIZATION AND TIERING. In prescribing or issuing standards under subsection (a) governing the conduct of identified activities and the operations of identified financial market utilities, the Board shall, where appropriate, differentiate among identified financial market utilities and identified activities by taking into consideration their risk, complexity, leverage, frequency and dollar amount, interconnectedness to the financial system, and any other factors the Board deems appropriate. (d) COMPLIANCE REQUIRED.Identified financial market utilities and financial institutions engaged in identified activities shall conduct their operations in compliance with the applicable risk management standards prescribed by the Board. SEC. 1406. OPERATIONS AND CHANGES TO RULES, PROCEDURES, OR OPERATIONS OF IDENTIFIED FINANCIAL MARKET UTILITIES. (a) REFERENCE.For purposes of paragraphs (b) and (c), all references to the phrase
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Supervisory Agency or the Board mean Supervisory Agency or, in the absence of a Supervisory Agency, the Board. (b) ADVANCE NOTICE OF PROPOSED CHANGES. (1) ADVANCE NOTICE REQUIRED.Subject to subsection (c), an identified financial market utility shall provide at least 60 days advance notice to the Supervisory Agency or the Board of any proposed change to its rules, procedures, or operations that could, as defined in rules of the Board, materially affect the nature or level of risks presented by the identified financial market utility. (2) TERMS AND STANDARDS PRESCRIBED BY THE BOARD.The Board shall prescribe regulations that define and describe the standards for determining when notice is required to be provided under paragraph (1). (3) CONSULTATION AND AVOIDANCE OF DUPLICATION.In prescribing regulations under paragraph (2), the Board shall (A) consult with the Commodity Futures Trading Commission and the Securities and Exchange Commission regarding the extent to which the regulations of those agencies already require advance notice of rule, procedural, or operational changes; and (B) seek to avoid duplicative requirements under this section whenever possible. (4) CONTENTS OF NOTICE.Any notice of a proposed change provided by an identified financial market utility under paragraph (1) shall describe (A) the nature of the change; (B) any expected effects on risks to the identified financial market utility,
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(C) the manner in which the identified financial market utility plans to manage any identified risks. (5) ADDITIONAL INFORMATION.The Supervisory Agency or the Board may require an identified financial market utility to provide any information necessary to assess (A) the effect the proposed change would have on the nature or level of risks associated with the identified financial market utility's payment, clearing, or settlement activities; and (B) the sufficiency of any proposed risk management techniques. (6) NOTICE OF OBJECTION.The Supervisory Agency or the Board will notify the identified financial market utility of any objection regarding the proposed change before the end of the 60-day period beginning on the later of (A) the date that the notice of the proposed change is received; or (B) the date any further information requested for consideration of the notice is received. (7) CHANGE NOT ALLOWED IF OBJECTION.An identified financial market utility shall not implement a change to which the Supervisory Agency or Board has an objection. (8) CHANGE ALLOWED IF NO OBJECTION WITHIN 60 DAYS. An identified financial market utility may implement a change if it has not received an objection to the proposed change before the end of the 60-day period beginning on the later of (A) the date that the Supervisory Agency or the Board receives the notice
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(B) the date the Supervisory Agency or the Board receives any further information that the Supervisory Agency or the Board requests for consideration of the notice. (9) REVIEW EXTENSION FOR NOVEL OR COMPLEX ISSUES. (A) IN GENERAL. The Supervisory Agency or the Board 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 or the Board providing the identified financial market utility with prompt written notice of the extension. (B) EXTENSION OF OTHER TIME PERIODS.Any time period referred to under paragraphs (6) and (8) shall be extended by the amount of any extension of time under clause (A). (10) CHANGE ALLOWED EARLIER IF NOTIFIED OF NO OBJECTION.An identified 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 Board, or the date the Supervisory Agency or the Board receives any further information it requested, if (A) the Supervisory Agency or the Board notifies the identified financial market utility in writing that it does not object to the proposed change; and (B) authorizes the identified financial market utility to implement the change on an earlier date, subject to any conditions imposed by the Supervisory Agency or the Board.
144 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 (c) EMERGENCY CHANGES.
(1) IN GENERAL.An identified financial market utility may implement a change that would otherwise require advance notice under this subsection if it determines that (A) an emergency exists; and (B) immediate implementation of the change is necessary for the identified financial market utility to continue to provide its services in a safe and sound manner. (2) NOTICE REQUIRED WITHIN 24 HOURS.Any identified financial market utility that implements a change pursuant to a determination under paragraph (1) shall provide notice of such an emergency change to its Supervisory Agency or the Board as soon as practicable, which shall be no later than 24 hours after implementation of the change. (3) CONTENTS OF EMERGENCY NOTICE.In addition to the information required under subsection (b) for any change requiring an advance notice, the notice under paragraph (2) of an emergency change must describe (A) the nature of the emergency; and (B) the reason the change was necessary for the identified financial market utility to continue to provide its services in a safe and sound manner. (4) MODIFICATION OR RESCISSION OF CHANGE MAY BE REQUIRED.The Supervisory Agency or the Board may require a modification or a rescission of any change of which the Supervisory Agency or the Board receives notice under this subsection if the Supervisory Agency or the Board finds that the change is not consistent with the purposes of this subtitle or any regulations, orders, or standards prescribed, issued, or established by the Board hereunder.
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(d) COORDINATION BETWEEN AGENCIES AND THE BOARD.In the case of an identified financial market utility that has a Supervisory Agency other than the Board, the Supervisory Agency shall (1) provide the Board concurrently with a complete copy of any notice, request, or other information such agency issues, submits, or receives under this subsection with respect to such utility; and (2) consult with the Board before taking any action on or completing any review of a change proposed by an identified financial market utility. SEC. 1407. EXAMINATION OF AND ENFORCEMENT ACTIONS AGAINST IDENTIFIED FINANCIAL MARKET UTILITIES. (a) EXAMINATION.Notwithstanding any other provision of law and subject to subsection (d), the Supervisory Agency shall conduct examinations of an identified financial market utility at least annually in order to inform itself of the following: (1) the nature of the operations of, and the risks borne by, the identified financial market utility; (2) the financial and operational risks presented by the identified financial market utility to financial institutions, critical markets, or the broader financial system; (3) the resources and capabilities of the identified financial market utility to monitor and control such risks; (4) the safety and soundness of the identified financial market utility; and (5) the identified financial market utilitys compliance with this subtitle and the rules and orders prescribed by the Board under this subtitle. (b) SERVICE PROVIDERS.
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(1) Whenever a service integral to the operation of an identified financial market utility is performed for the identified financial market utility by another entity, whether an affiliate or non-affiliate and whether on or off the premises of the identified 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 identified financial market utility were performing the service on its own premises. (c) ENFORCEMENT.Except as provided in subsections (e) and (g), an identified financial market utility 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 identified financial market utility were an insured depository institution for which the Supervisory Agency is the appropriate Federal banking agency as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813). (d) BOARD INVOLVEMENT IN EXAMINATIONS. (1) BOARD CONSULTATION ON EXAMINATION PLANNING.The Supervisory Agency shall consult with the Board regarding the scope and methodology of any examination conducted under subsections (a) and (b). (2) BOARD PARTICIPATION IN EXAMINATION.The Board may, in its discretion, participate in any examination led by a Supervisory Agency and conducted under subsections (a) and (b). (e) BOARD ENFORCEMENT RECOMMENDATIONS. (1) RECOMMENDATION.The Board may at any time recommend to the Supervisory Agency that it take enforcement action against an identified financial market
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utility. The recommendation shall be in writing and shall provide a detailed analysis supporting the Boards recommendation. (2) CONSIDERATION.The Supervisory Agency shall consider the Boards recommendation and submit a response to the Board within 30 days. (3) MEDIATION.If the Supervisory Agency rejects, in whole or in the part, the Boards recommendation, then the Council shall mediate between the parties and encourage them to reach agreement on whether an enforcement action should be brought, and if so by which agency. (4) ENFORCEMENT ACTION.If the Supervisory Agency fails to respond to the Boards recommendation in accordance with paragraph (2), if the Supervisory Agency reaches agreement with the Board that the Board should take an enforcement action, or if the Supervisory Agency rejects the Boards recommendation and the Council is unable to resolve the dispute under paragraph (3), then the Board may exercise the enforcement authority referenced in subsection (c) as if it were the Supervisory Agency and take enforcement action against the identified financial market utility. (f) IDENTIFIED FINANCIAL MARKET UTILITIES WITHOUT A SUPERVISORY AGENCY.In the case of an identified financial market utility that is not under the primary jurisdiction of a Supervisory Agency, the Board shall have examination and enforcement authority under subsections (a) through (c) with respect to the identified financial market utility and any service providers in the same manner and to the same extent as if the Board were the Supervisory Agency. (g) EMERGENCY ENFORCEMENT ACTIONS BY THE BOARD.
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(1) IMMINENT RISK OF SUBSTANTIAL HARM.The Board may, after consulting with the Supervisory Agency, take enforcement action against an identified financial market utility if the Board has reasonable cause to believe that (A) either (i) an action engaged in, or contemplated by, an identified financial market utility (including any change proposed by the identified financial market utility to its rules, procedures, or operations that would otherwise be subject to section 1406(b) or (c)); or (ii) the condition of an identified 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 Boards use of the procedures in subsection (e). (2) ENFORCEMENT AUTHORITY.The Board is authorized to take action under paragraph (1) against an identified financial market utility as if the identified financial market utility were an insured depository institution for which the Board is the appropriate Federal banking agency as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813). (3) PROMPT NOTICE TO SUPERVISORY AGENCY OF ENFORCEMENT ACTION.Within 24 hours of taking an enforcement action under this subsection, the Board shall provide written notice to the identified financial market utilitys Supervisory Agency containing a detailed analysis of the Boards action, with supporting documentation included. SEC. 1408. EXAMINATION OF AND ENFORCEMENT ACTIONS AGAINST
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FINANCIAL INSTITUTIONS SUBJECT TO STANDARDS FOR IDENTIFIED ACTIVITIES. (a) EXAMINATION.The appropriate financial regulator shall periodically conduct examinations of a financial institution that is subject to the standards prescribed by the Board for an identified activity in order to inform the appropriate financial regulator of the following: (1) the nature and scope of the identified activities engaged in by the financial institution; (2) the financial and operational risks the identified 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 identified 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); and (5) the financial institutions compliance with this subtitle and the rules and orders prescribed by the Board under this subtitle. (b) ENFORCEMENT.The appropriate financial regulator shall take such actions that it deems necessary to ensure that a financial institution that is subject to the standards prescribed by the Board for an identified activity complies with this subtitle and the rules and orders prescribed by the Board under this subtitle. (c) TECHNICAL ASSISTANCE.The Board shall consult with and provide such technical assistance as may be required by the appropriate financial regulators to ensure that the Boards rules and orders prescribed under this subtitle are interpreted and applied in as consistent and
150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 uniform a manner as practicable. (d) DELEGATION. (1) EXAMINATION.
(A) REQUEST TO BOARD.The appropriate financial regulator may request the Board to conduct, or to participate in, an examination of a financial institution subject to the standards prescribed by the Board for an identified activity in order to assess the financial institutions compliance with this subtitle or the Boards rules or orders prescribed under this subtitle. (B) EXAMINATION BY BOARD.Upon receipt of an appropriate written request, the Board will conduct the examination under such terms and conditions to which the Board and the appropriate financial regulator mutually agree. (2) ENFORCEMENT. (A) REQUEST TO BOARD.An appropriate financial regulator may request the Board to enforce this subtitle or the rules or orders prescribed by the Board under this subtitle against a financial institution subject to the standards prescribed by the Board for an identified activity. (B) ENFORCEMENT BY BOARD.Upon receipt of an appropriate written request, the Board shall (i) determine whether an enforcement action is warranted; and, (ii) if so, it shall enforce compliance with this subtitle or the rules or orders prescribed by the Board under this subtitle (C) ENFORCEMENT AUTHORITY. For purposes of carrying out subparagraph (B), the Board shall have authority under subsections (b) through
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(n) of section 8 of the Federal Deposit Insurance Act with respect to a financial institution in the same manner and to the same extent as if the financial institution were an insured depository institution for which the Board is the appropriate Federal banking agency (as defined in section 3 of such Act). (e) BACK-UP AUTHORITY OF THE BOARD. (1) EXAMINATION AND ENFORCEMENT.Notwithstanding any other provision of law, the Board may (A) conduct an examination of any financial institution that is subject to the standards prescribed by the Board for an identified activity; and (B) enforce the provisions of this subtitle or any rules or orders prescribed by the Board under this subtitle against any financial institution subject to the standards prescribed by the Board for an identified activity. (2) LIMITATIONS. (A) EXAMINATION.The Board may exercise the authority described in paragraph (1)(A) only if the Board has (i) reasonable cause to believe that a financial institution is not in compliance with this subtitle or the rules or orders prescribed by the Board under this subtitle with respect to an identified activity; (ii) notified, in writing, the appropriate financial regulator 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; and (iv) either
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(I) 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 Boards notification under clause (ii); or (II) reasonable cause to believe that the financial institutions noncompliance with this subtitle or the rules or orders prescribed by the Board under this subtitle poses a substantial risk to other financial institutions, critical markets, or the broader financial system, subject to the Board affording the appropriate financial regulator a reasonable opportunity to participate in the examination. (B) ENFORCEMENT.The Board may exercise the authority described in paragraph (1)(B) only if the Board has (i) reasonable cause to believe that a financial institution is not in compliance with this subtitle or the rules or orders prescribed by the Board under this subtitle with respect to an identified activity; (ii) notified, in writing, the appropriate financial regulator of its belief under clause (i) with supporting documentation included and with a recommendation that the appropriate financial regulator take one or more specific enforcement actions against the financial institution; and (iii) either (I) not been notified, in writing, by the appropriate financial regulator of the commencement of an enforcement action
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recommended by the Board against the financial institution within 30 days from the date of the notification under clause (ii); or (II) reasonable cause to believe that the financial institutions noncompliance with this subtitle or the rules or orders prescribed by the Board under this subtitle poses a substantial risk to other financial institutions, critical markets, or the broader financial system, subject to the Board notifying the appropriate financial regulator of the Boards enforcement action. (3) ENFORCEMENT PROVISIONS.The Board shall have authority under subsections (b) through (n) of section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) with respect to a financial institution subject to the standards prescribed by the Board for an identified activity in the same manner and to the same extent as if the financial institution were an insured depository institution for which the Board is the appropriate Federal banking agency (as defined in section 3 of such Act). SEC. 1409. PROVISION OF 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 purpose of assessing whether that financial market utility is systemically important if the Council has reasonable cause to believe that the financial market utility meets the standards for systemic importance set out in section 1404 of this subtitle. (2) FINANCIAL INSTITUTIONS ENGAGED IN PAYMENT, CLEARING, OR SETTLEMENT
ACTIVITIES.The
Council is authorized to require any financial institution to submit such
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information as the Council may require for the purpose of assessing whether any payment, clearing, or settlement activity engaged in or supported by a financial institution is systemically important if the Council has reasonable cause to believe that the activity meets the standards for systemic importance set out in section 1404 of this subtitle. (b) REPORTING AFTER IDENTIFICATION. (1) IDENTIFIED FINANCIAL MARKET UTILITIES.The Board may require an identified financial market utility to submit reports or data to the Board in such frequency and form as deemed necessary by the Board in order to assess the safety and soundness of the utility and the systemic risk that the utilitys operations pose to the financial system. (2) FINANCIAL INSTITUTIONS SUBJECT TO THE STANDARDS PRESCRIBED BY THE BOARD.The Board may require 1 or more financial institutions subject to the standards prescribed by the Board for an identified activity to submit, in such frequency and form as deemed necessary by the Board, reports and data to the Board solely with respect to the conduct of the identified activity and solely to assess whether (A) any regulation, order, standard, or guideline prescribed by the Board with respect to the identified activity appropriately address the risks to the financial system presented by such activity; and (B) the financial institutions are in compliance with this subtitle and the rules and orders prescribed by the Board under this subtitle with respect to the identified activity. (c) COORDINATION WITH APPROPRIATE FEDERAL SUPERVISORY AGENCY. (1) ADVANCE COORDINATION.Before directly requesting any material information from, or imposing reporting or recordkeeping requirements on, any financial
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market utility or any financial institution engaged in a payment, clearing, or settlement activity, the Council and the Board 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 Council or the Board. (2) SUPERVISORY REPORTS.Notwithstanding any other provision of law, the Supervisory Agencies, the appropriate financial regulators, the Council, and the Board are authorized to disclose to each other a copy of the relevant portion of any examination report or similar report 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.If the information, report, records, or data requested by the Council or the Board under subsection (c)(1) are not provided in full by the Supervisory Agency or the appropriate financial regulator within 30 days after the date on which the material is requested, the Council or the Board 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 Supervisory Agency or the appropriate financial regulator. (e) SHARING OF INFORMATION. (1) MATERIAL CONCERNS.Notwithstanding any other provision of law, the Council, the Board, the appropriate financial regulator, and any Supervisory Agency are authorized to (A) promptly notify each other of material concerns about an identified financial market utility or any financial institution subject to the standards
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prescribed by the Board for an identified activity; and (B) share appropriate reports, information or data relating to such concerns. (2) OTHER.Notwithstanding any other provision of law, the Council or the Board may, under such terms and conditions it deems appropriate and subject to reasonable assurances of confidentiality, provide confidential supervisory information and other information obtained under this subtitle to other persons it deems appropriate, including the Secretary, State financial institution supervisory agencies, foreign financial supervisors, foreign central banks, and foreign finance ministries. (f) PRIVILEGE MAINTAINED.The Council, the Board, the appropriate financial regulator, the Supervisory Agency, and any financial market utility or financial institution 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. (1) IN GENERAL. Information obtained by the Board under this section and any materials prepared by the Board in connection with its supervision of identified financial market utilities and identified activities, shall be confidential supervisory information exempt from disclosure under section 552 of title 5, United States Code. (2) For purposes of section 552 of title 5, this subsection shall be considered a statute described in subsection (b)(3) of section 552. SEC. 1410. RULEMAKING. The Board is authorized to prescribe such rules and issue such orders as may be
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necessary to administer and carry out the purposes of this subtitle and prevent evasions thereof. SEC. 1411. OTHER AUTHORITY. The authorities granted to agencies under this subtitle are in addition to any rulemaking, examination, enforcement, or other authorities that those agencies may have under other law and in no way shall be construed to limit such other authority, except that any standards imposed by the Board under section 1405 shall supersede any less stringent requirements established under other authority to the extent of any conflict. SEC. 1412. EFFECTIVE DATE. This subtitle is effective as of the date of enactment.
SUBTITLE F IMPROVEMENTS TO THE ASSET-BACKED SECURITIZATION PROCESS

SEC. 1501. SHORT TITLE. This Subtitle may be cited as the Credit Risk Retention Act of 2009. SEC. 1502. CREDIT RISK RETENTION. The Securities Act of 1933 (15 U.S.C. 77a et seq.) is amended by inserting after section 28 the following new section: SEC. 29. CREDIT RISK RETENTION. (a) IN GENERAL. (1) INTEREST IN LOANS MADE BY CREDITORS.Within 180 days of the date of enactment of this Act, the Federal banking agencies and the Commission shall jointly prescribe regulations to require any creditor that makes a loan to retain an economic interest in a material portion of the credit risk of any such loan that the creditor transfers, sells, or
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conveys to a third party, including for the purpose of including such loan in a pool of loans backing an issuance of asset-backed securities. (2) INTEREST IN ASSETS BACKING ASSETBACKED SECURITIES.The Federal banking agencies and the Commission shall prescribe regulations to require any securitizer of asset-backed securities that are backed by assets not described in paragraph (1) to retain an economic interest in a material portion of any such asset used to back an issuance of securities. (b) ALTERNATIVE RISK RETENTION FOR CREDIT SECURITIZERS.The Federal banking agencies and the Commission may jointly apply the risk retention requirements of this section to securitizers of loans or particular types of loans in addition to or in substitution for any or all of the requirements that apply to creditors that make such loans or types of loans, if the agencies jointly determine that applying the requirements to such securitizers would (1) be consistent with helping to ensure high quality underwriting standards for creditors, taking into account other applicable laws, regulations, and standards; and (2) facilitate appropriate risk management practices by such creditors, improve access of consumers to credit on reasonable terms, or otherwise serve the public interest. (c) STANDARDS FOR REGULATION.Regulations prescribed under subsections (a) and (b) shall (1) prohibit a creditor or securitizer from directly or indirectly hedging or otherwise transferring the credit risk such creditor or securitizer is required to retain under the regulations;
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(2) require a creditor or securitizer to retain 10 percent of the credit risk on any loan that is transferred, sold, or conveyed by such creditor or securitized by such securitizer except (A) if the Federal banking agencies and the Commission determine the credit underwriting by the creditor or the due diligence by the securitizer meets such standards as the Federal banking agencies and the Commission shall specify, the percentage of risk retention may be less than 10 percent of the credit risk, but in no case less than 5 percent of credit risk; and (B) if the Federal banking agencies and the Commission determine the underwriting by the creditor or due diligence by the securitizer is insufficient, the percentage of risk retention may be higher than 10 percent; (3) specify that the credit risk retained must be no less at risk for loss than the average of the credit risk not so retained; and (4) set the minimum duration of the required risk retention. (d) EXEMPTIONS AND ADJUSTMENTS. (1) IN GENERAL.The Federal banking agencies and the Commission shall have authority to jointly provide exemptions or adjustments to the requirements of this section, including exemptions or adjustments relating to the 10 percent risk retention threshold and the hedging prohibition. (2) APPLICABLE STANDARDS.Any exemptions or adjustments provided under paragraph (1) shall
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(A) be consistent with the purpose of ensuring high quality underwriting standards for creditors, taking into account other applicable laws, regulations, or standards; and (B) facilitate appropriate risk management practices by such creditors, improve access for consumers to credit on reasonable terms, or otherwise serve the public interest. (e) ENFORCEMENT. (1) Compliance with the requirements imposed under this subchapter shall be enforced under (A) section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818), in the case of (i) national banks, and Federal branches and Federal agencies of foreign banks, by the Office of the Comptroller of the Currency; (ii) 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 25(a) of the Federal Reserve Act (12 U.S.C. 601 et seq., 611 et seq.), bank holding companies, and subsidiaries of bank holding companies (other than insured depository institutions), by the Board; and (iii) banks insured by the Federal Deposit Insurance Corporation (other than members of the Federal Reserve System) and insured State branches
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of foreign banks, by the Board of Directors of the Federal Deposit Insurance Corporation; (B) section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818), by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation and a savings and loan holding company and to any subsidiary (other than a bank or subsidiary of that bank); and (C) the Federal Credit Union Act (12 U.S.C. 1751 et seq.), by the National Credit Union Administration Board with respect to any Federal credit union. (2) Except to the extent that enforcement of the requirements imposed under this subchapter is specifically committed to some other Government agency under subparagraph (1), the Commission shall enforce such requirements. (3) The authority of the Commission under this section shall be in addition to its existing authority to enforce the securities laws. (f) DEFINITIONS.For purposes of this section: (1) The term asset-backed security has the meaning given such term in section 229.1101(c) of title 17, Code of Federal Regulations, or any successor thereto. (2) The term Federal banking agencies means the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Deposit Insurance Corporation. (3) The term insured depository institution has the meaning given such term in section 3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)).
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(4) The term securitization vehicle means a trust, corporation, partnership, limited liability entity, special purpose entity, or other structure that (A) is the issuer, or is created by the issuer, of pass-through certificates, participation certificates, asset-backed securities, or other similar securities backed by a pool of assets that includes loans; and (B) holds such loans. (5) The term securitizer means the person that transfers, conveys, or assigns, or causes the transfer, conveyance, or assignment of, loans, including through a special purpose vehicle, to any securitization vehicle, excluding any trustee that holds such loans for the benefit of the securitization vehicle.. SEC. 1503. PERIODIC AND OTHER REPORTING UNDER THE SE20 CURITIES EXCHANGE ACT OF 1934 FOR ASSET-BACKED SECURITIES. Section 15(d) of Securities Exchange Act of 1934 (15 U.S.C. 78o(d)) is amended (1) by inserting , other than securities of any class of asset-backed security (as defined in section 229.1101(c) of title 17, Code of Federal Regulations, or any successor thereto), after securities of each class; (2) by inserting at the end the following: The Commission may by rules and regulations provide for the suspension or termination of the duty to file under this subsection for any class of issuer of asset-backed security upon such terms and conditions and for such period or periods as it deems necessary or appropriate in the public interest or for the protection of investors. The Commission may, for the purposes of this subsection, classify issuers and prescribe requirements appropriate for each class of issuer of assetbacked security.; and
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(3) by inserting after the fifth sentence the following: 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. In adopting regulations under this subsection, the Commission shall 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. The Commission shall require issuers of asset-backed securities at a minimum to disclose asset-level or loan-level data necessary for investors to independently perform due diligence. Asset-level or loan-level data shall include data with unique identifiers relating to loan brokers or originators, the nature and extent of the compensation of the broker or originator of the assets backing the security, and the amount of risk retention of the originator or the securitizer of such assets.. SEC. 1504. REPRESENTATIONS AND WARRANTIES IN ASSET-BACKED OFFERINGS. The Commission shall prescribe regulations on the use of representations and warranties in the asset-backed securities market that (1) require credit rating agencies to include in reports accompanying credit ratings a description of the representations, warranties, and enforcement mechanisms available to investors and how they differ from representations, warranties, and enforcement mechanisms in similar issuances; and (2) require disclosure on fulfilled repurchase requests across all trusts aggregated by originator, so that investors may identify asset originators with clear underwriting deficiencies.
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SEC. 1505. EXEMPTED TRANSACTIONS UNDER THE SECURITIES ACT OF 1933. (a) IN GENERAL.Section 4 of the Securities Act of 1933 (15 U.S.C. 77d) is amended (1) by striking paragraph (5); and (2) by redesignating paragraph (6) as paragraph (5). (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).
SUBTITLE GENHANCED RESOLUTION AUTHORITY

SEC. 1601. SHORT TITLE. This Act may be cited as the Resolution Authority for Large, Interconnected Financial Companies Act of 2009. SEC. 1602. DEFINITIONS. For purposes of this title, the following definitions shall apply: (1) APPROPRIATE FEDERAL REGULATORY AGENCY. (A) CORPORATION AND COMMISSION.The term Appropriate Federal Regulatory Agency means (i) the Corporation; and (ii) the Commission, if the financial company, or an affiliate thereof, 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) (other than an insured depository institution)). (B) RULES OF CONSTRUCTION.More than one agency may be an Appropriate Federal Regulatory Agency with respect to any given financial company. In such instances, the Commission shall be the Appropriate Federal
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Regulatory Agency for purposes of section 1603 if the largest subsidiary of the financial company is a broker or dealer as measured by total assets as of the end of the previous calendar quarter, and otherwise the Corporation shall be the Appropriate Federal Regulatory Agency for purposes of section 1603. (2) BRIDGE FINANCIAL COMPANY.The term bridge financial company means a new financial company organized in accordance with section 1609(h) by the Corporation. (3) COMMISSION.The term Commission means the Securities and Exchange Commission. (4) CORPORATION.The term Corporation means the Federal Deposit Insurance Corporation. (5) COVERED FINANCIAL COMPANY.The term covered financial company means a financial company for which a determination has been made pursuant to and in accordance with section 1603(b). (6) COVERED SUBSIDIARY.The term covered subsidiary means a subsidiary covered in paragraph (9)(B)(iv) of this section. (7) CUSTOMER PROPERTY.The term customer property has the meaning ascribed to it in the Securities Investor Protection Act of 1970. (8) FEDERAL RESERVE BOARD.The term Federal Reserve Board means the Board of Governors of the Federal Reserve System. (9) FINANCIAL COMPANY.The term financial company means any company that (A) is incorporated or organized under Federal law or the laws of
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(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) any identified financial holding company, as defined in section 2(5) of the Financial Stability Improvement Act of 2009, that has been subjected to heightened prudential regulation; (iii) any company predominantly engaged in activities that 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)) or that have been identified for heightened prudential standards under section 1106 of this title; or (iv) any subsidiary of companies described in clauses (i) through (iii) (other than an insured depository institution, any broker or dealer registered with the Commission under section 15(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)) that is a member of the Securities Investor Protection Corporation, or an insurance company). (10) FUND.The term Fund means the Systemic Resolution Fund established in accordance with section 1609(n). (11) IDENTIFIED FINANCIAL HOLDING COMPANY.The term identified financial holding company means a financial company that is subject to heightened prudential standards, as defined in section 2(5) of the Financial
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(12) INSURANCE COMPANY.The term insurance company means a domestic insurance company, as that term is defined for purposes of title 11 of the United States Code. (13) SECRETARY.The term Secretary shall mean the Secretary of the Treasury. (14) 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, and the United States Virgin Islands. (15) CERTAIN OTHER TERMS.The terms affiliate, company, control, deposit, depository institution, foreign bank, insured depository institution, and subsidiary have the same meanings as in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813). SEC. 1603. SYSTEMIC RISK DETERMINATION. (a) WRITTEN RECOMMENDATION OF THE FEDERAL RESERVE BOARD AND THE APPROPRIATE FEDERAL REGULATORY AGENCY. (1) VOTE REQUIRED.At the request of the Secretary or the Chairman of the Federal Reserve Board or, in cases where an financial company has a broker or dealer as its largest subsidiary as measured by total assets as of the end of the previous calendar quarter, the Commission, the Federal Reserve Board and the Appropriate Federal Regulatory Agency shall, or on their own initiative the Federal Reserve Board and the Appropriate Federal Regulatory Agency may, consider whether to make the written
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recommendation provided for in paragraph (2) with respect to a financial company that is an identified financial holding company, which recommendation shall be made upon a vote of not less than two-thirds of the members of the Federal Reserve Board then serving and two-thirds of the members of the board or of the commission then serving of the Appropriate Federal Regulatory Agency, as applicable. (2) RECOMMENDATION REQUIRED.Any written recommendations made by the Federal Reserve Board and the Appropriate Federal Regulatory Agency under paragraph (1) shall contain the following (A) a description of the effect that the default of the identified financial holding company would have on economic conditions or financial stability in the United States; and (B) a recommendation regarding the nature and the extent of actions that the Board and the Appropriate Federal Regulatory Agency recommend be taken under section 1604 regarding the identified financial holding company. (b) DETERMINATION BY THE SECRETARY.Notwithstanding any other provision of Federal law or the law of any State, if, upon the written recommendation of the Federal Reserve Board and the board of directors or commission of the Appropriate Federal Regulatory Agency as provided for in subsection (a)(1), the Secretary (in consultation with the President) determines that (1) the identified financial holding company is in default or is in danger of default; (2) the failure of the identified financial holding company and its resolution under otherwise applicable Federal or State law would have serious adverse effects on
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financial stability or economic conditions in the United States; and (3) any action under section 1604 would avoid or mitigate such adverse effects, taking into consideration the effectiveness of the action in mitigating potential adverse effects on the financial system or economic conditions, the cost to the general fund of the Treasury, and the potential to increase moral hazard on the part of creditors, counterparties, and shareholders in the identified financial holding company, then the Secretary must take action under section 1604(a), the Corporation must act in accordance with section 1604(b), and the Corporation may take one or more actions specified in section 1604(c) in accordance with the requirements of that subsection. (c) DOCUMENTATION AND REVIEW. (1) IN GENERAL.The Secretary shall (A) document any determination under subsection (b); and, (B) retain the documentation for review under paragraph (2). (2) GAO REVIEW.The Comptroller General of the United States shall review and report to the Congress on any determination under subsection (b), including: (A) the basis for the determination; (B) the purpose for which any action was taken pursuant thereto; and (C) the likely effect of the determination and such action on the incentives and conduct of identified financial holding companies and their creditors, counterparties, and shareholders. (3) REPORT TO CONGRESS.Within 30 days after a determination is made under subsection (b), the Secretary shall provide written notice of the determination to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on
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Financial Services of the House of Representatives. The notice shall include a description of the basis for the determination. (d) DEFAULT OR IN DANGER OF DEFAULT.For purposes of subsection (b), an identified financial holding company shall be considered to be in default or in danger of default if any of the following conditions exist, as determined in accordance with that subsection: (1) a case has been, or likely will promptly be, commenced with respect to the identified financial holding company under title 11, United States Code; (2) the identified financial holding company is critically undercapitalized, as such term has been or may be defined by the Federal Reserve Board; (3) the identified financial holding 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 without assistance under section 1604; (4) the identified financial holding companys assets are, or are likely to be, less than its obligations to creditors and others; or (5) the identified financial holding 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. SEC. 1604. RESOLUTION; STABILIZATION. (a) APPOINTMENT OF RECEIVER. (1) APPROVAL OF CORPORATION AND FEDERAL RESERVE BOARD.Upon the Secretary making a determination in accordance with section 1603(b), the Secretary shall appoint the Corporation as receiver or qualified receiver for the covered financial company. There shall be a strong presumption that the Secretary will appoint the
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Corporation as receiver. The presumption may be overcome only if the Secretary, the Federal Reserve Board, and the Corporation agree that the appointment of a qualified receiver is necessary to avoid or mitigate serious adverse effects on financial stability. (b) CONSULTATION.The Corporation, as receiver or qualified receiver (1) shall consult with the regulators of the covered financial company and its covered subsidiaries for purposes of ensuring an orderly resolution of the covered financial company; (2) may consult with, or under section 1609(a)(1)(B)(v) or section 1609(a)(1)(K) acquire services of, any outside experts as appropriate to inform and aid the Corporation in the resolution process; and (3) shall consult with the primary regulators of any subsidiaries of the covered financial company that are not covered subsidiaries as described in section 1602(9)(B)(iv) 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. (c) EMERGENCY STABILIZATION AFTER APPOINTMENT OF RECEIVER OR QUALIFIED
RECEIVER. Upon
the Secretary appointing the Corporation as receiver or qualified receiver
under subsection (a), the Corporation may, in its corporate capacity and as an agency of the United States, with the approval of the Secretary and subject to the conditions in subsections (d) through (e), take the following actions under such terms and conditions that the Corporation and the Secretary jointly deem appropriate: (1) making loans to, or purchasing any debt obligation of, the covered financial company or any covered subsidiary;
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(2) purchasing 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 one or more third parties; (4) acquiring any type of equity interest or security of the covered financial company or any covered subsidiary; (5) 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 company or any covered subsidiary to secure repayment of any transactions conducted under this subsection; or (6) selling or transferring all, or any part thereof, of such acquired assets, liabilities, obligations, equity interests or securities of the covered financial company or any covered subsidiary. (d) MANDATORY TERMS AND CONDITIONS FOR ALL STABILIZATION ACTIONS. The Corporation as receiver or qualified receiver is authorized to take the stabilization actions listed in subsection (c) only if (1) the Secretary and the Corporation determine that such action is necessary for the purpose of financial stability and not for the purpose of preserving the covered financial company; (2) the Corporation ensures that the shareholders of a covered financial company do not receive payment until after all other claims are fully paid; (3) the Corporation ensures that unsecured creditors bear losses; and (4) the Corporation ensures that management responsible for the failed condition
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of the covered financial company is removed (if such management has not already been removed at the time the Corporation is appointed as receiver or qualified receiver). (e) RECOUPMENT OF FUNDS EXPENDED FOR SYSTEMIC STABILIZATION PURPOSES. Amounts expended from the Fund by the Corporation under this section shall be repaid in full to the Fund from (1) AMOUNTS RECEIVED THROUGH THE RESOLUTION PROCESS. (A) the proceeds of the sale of, or income from, the assets of the covered financial company; and (B) the proceeds of the transfer of any securities obtained under subsection (c); and (2) INDUSTRY ASSESSMENTS. If the sources described in paragraph (1) are insufficient to repay the amount of the stabilization action in full, the difference shall be recouped through assessments on financial companies in accordance with section 1609(o). SEC. 1605. JUDICIAL REVIEW. If a receiver or qualified receiver is appointed, the covered financial company may, not later than 30 days thereafter, bring an action in the United States district court for the judicial district in which the home office of such covered financial company is located, or in the United States District Court for the District of Columbia, for an order requiring that the receiver or qualified receiver be removed, and the court shall, upon the merits, dismiss such action or direct the receiver or qualified receiver to be removed. Review of such an action shall be limited to the appointment of a receiver or qualified receiver under section 1604. SEC. 1606. DIRECTORS NOT LIABLE FOR ACQUIESCING IN APPOINTMENT OF
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The members of the board of directors (or body performing similar functions) of a covered financial company shall not be liable to the covered financial companys shareholders or creditors for acquiescing in or consenting in good faith to (1) the Secretarys appointment of the Corporation as receiver or qualified receiver for the covered financial company under section 1604; or (2) an acquisition, combination, or transfer of assets or liabilities under section
SEC. 1607. TERMINATION AND EXCLUSION OF OTHER ACTIONS. The Corporations acting as receiver or qualified receiver for a covered financial company under this title shall immediately, and by operation of law, terminate any case commenced with respect to the covered financial company under title 11, United States Code, or any proceeding under any State insolvency law with respect to the covered financial company, and no such case or proceeding may be commenced with respect to the covered financial company at any time while the Corporation acts as receiver or qualified receiver for the covered financial company. SEC. 1608. RULEMAKING. The Corporation may prescribe such rules or regulations it considers necessary or appropriate to implement the provisions of this title. SEC. 1609 POWERS AND DUTIES OF CORPORATION. (a) POWERS AND AUTHORITIES. (1) GENERAL POWERS. (A) SUCCESSOR TO COVERED FINANCIAL COMPANY.The Corporation
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shall, upon appointment as receiver or qualified receiver for a covered financial company under section 1604, and by operation of law, succeed to (i) all rights, titles, powers, and privileges of the covered financial company, and of any stockholder, member, officer, or director of such institution with respect to the covered financial company and the assets of the covered financial company; and (ii) title to the books, records, and assets of any previous receiver or other legal custodian of such covered financial company. (B) OPERATE THE COVERED FINANCIAL COMPANY.The Corporation as receiver or qualified receiver for a covered financial company may (i) take over the assets of and operate the covered financial company with all 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 due the covered financial company; (iii) perform all functions of the covered financial company in the name of the covered financial company; (iv) preserve and conserve the assets and property of the covered financial company; and (v) provide by contract for assistance in fulfilling any function, activity, action, or duty of the Corporation as receiver or qualified receiver.
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(C) FUNCTIONS OF COVERED FINANCIAL COMPANYS OFFICERS, DIRECTORS,

AND SHAREHOLDERS.
(i) IN GENERAL.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 or qualified receiver under this section. (ii) PRESUMPTION.There shall be a strong presumption that the Corporation, as receive or qualified receiver, will remove management responsible for the failed condition of the covered financial company (if such management has not already been removed at the time the Corporation is appointed as receiver or qualified receiver). (D) POWERS OF AND DURATION AS QUALIFIED RECEIVER. (i) IN GENERAL.The Corporation may, as qualified receiver, and subject to all legally enforceable and perfected security interests in the assets of the covered financial company, take such action as may be (I) necessary to put the covered financial company in a sound and solvent condition; and (II) appropriate to carry on the business of the covered financial company and preserve and conserve the assets and property of the covered financial company. (ii) DURATION.The status of the Corporation as qualified receiver shall terminate at the end of the 2-year period following the date of its appointment as qualified receiver, unless the Corporation, with the
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approval of the Secretary and the Federal Reserve Board, terminates the qualified receivership before the end of the 2-year period. At the end of the two-year period, the qualified receivership shall become a receivership with the Corporation as receiver. (iii) EXTENSION OF
QUALIFIED RECEIVERSHIP.The
Corporation
may, with the approval of the Secretary and the Federal Reserve Board, extend the qualified receivership for 3 additional 1-year periods beyond the initial two-year period if necessary to promote financial stability. (E) ADDITIONAL POWERS AS RECEIVER.The Corporation may, as receiver, and subject to all legally enforceable and perfected security interests, place the covered financial company in liquidation and proceed 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. (F) ORGANIZATION OF NEW COMPANIES.The Corporation as receiver may organize a bridge financial company under subsection (h). (G) MERGER; TRANSFER OF ASSETS AND LIABILITIES. (i) IN GENERAL.Subject to clause (ii), the Corporation as receiver or qualified receiver may (I) merge the covered financial company with another company; or (II) transfer any asset or liability of the covered financial
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company (including 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. (I) IN GENERAL.If a transaction described in clause (i) 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, 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 proposed transaction and the Attorney General shall provide the required report within 10 days of the request. If a filing is required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with the Department of Justice or the Federal Trade Commission, the waiting period shall expire not later than the 30th day following such filing notwithstanding any other provision of Federal law or any attempt by any Federal agency to extend such waiting period, and no further request for information by any Federal agency shall be permitted. (II) EMERGENCY.If the Secretary in consultation with the Chairman of the Federal Reserve Board has found that the Corporation must act immediately to prevent the probable failure
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of 1 or more of the covered financial companies involved, the approvals and filings referred to in subclause (I) shall not be required and the transactions may be consummated immediately by the Corporation. (H) PAYMENT OF VALID OBLIGATIONS.The Corporation, as receiver or qualified receiver, shall, to the extent 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 or qualified receiver in accordance with the prescriptions and limitations of this title. (I) SUBPOENA AUTHORITY. (i) IN GENERAL.The Corporation may, for purposes of carrying out any power, authority, or duty with respect to a 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 covered financial company were an insured depository institution. (ii) RULE OF CONSTRUCTION.This section shall not be construed as limiting any rights that the Corporation, in any capacity, might otherwise have to exercise any powers described in clause (i) under any other provision of law. (J) INCIDENTAL POWERS.The Corporation, as receiver or qualified
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(i) exercise all powers and authorities specifically granted to receivers or qualified receivers under this section and such incidental powers as shall be necessary to carry out such powers; and (ii) take any action authorized by this section, which the Corporation determines is in the best interests of the covered financial company, its customers, its creditors, its counterparties, or the stability of the financial system. (K) UTILIZATION OF PRIVATE SECTOR. In carrying out its responsibilities in the management and disposition of assets from a covered financial company, the Corporation, as receiver or qualified receiver, 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 utilization of such services is practicable, efficient, and cost effective. (L) SHAREHOLDERS AND CREDITORS OF COVERED FINANCIAL COMPANY. Notwithstanding any other provision of law, the Corporation as receiver or qualified receiver for a covered financial company pursuant to this section and its succession, by operation of law, to the rights, titles, powers, and privileges described in subparagraph (A) 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
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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 provision s in section 1609(b). (M) COORDINATION WITH FOREIGN FINANCIAL AUTHORITIES.The Corporation as receiver or qualified receiver for a covered financial company shall coordinate with the appropriate foreign financial authorities regarding the resolution of subsidiaries of the covered financial company that are established in a country other than the United States. (2) AUTHORITY OF CORPORATION TO DETERMINE CLAIMS. (A) IN GENERAL.The Corporation may, as receiver, determine claims in accordance with the requirements of this subsection and regulations prescribed under paragraph (3). (B) NOTICE REQUIREMENTS.The receiver, 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 covered financial companys creditors to present their claims, together with proof, to the receiver by a date specified in the notice which shall be not less than 90 days after the publication of such notice; and (ii) republish such notice approximately 1 month and 2 months, respectively, after the publication under clause (i). (C) MAILING REQUIRED.The receiver shall mail a notice similar to the notice published under subparagraph (B)(i) at the time of such publication to any creditor shown on the covered financial companys books
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(i) at the creditors last address appearing in such books; or (ii) upon discovery of the name and address of a claimant not appearing on the covered financial companys books, within 30 days after the discovery of such name and address. (3) RULEMAKING AUTHORITY RELATING TO DETERMINATION OF CLAIMS. (A) IN GENERAL. Subject to subsection (b), the Corporation shall prescribe rules and regulations regarding the allowance or disallowance of claims by the Corporation and providing for administrative determination of claims and review of such determination. (B) EXISTING RULES. The Corporation may elect to use the regulations adopted pursuant to the provisions of section 11 of the Federal Deposit Insurance Act with respect to the determination of claims for a covered financial company as if the covered financial company were an insured depository institution. (4) PROCEDURES FOR DETERMINATION OF CLAIMS. (A) DETERMINATION PERIOD. (i) IN GENERAL.Before the end of the 180-day period beginning on the date any claim against a covered financial company is filed with the Corporation as receiver, the Corporation shall determine whether to allow or disallow the claim and shall notify the claimant of any determination with respect to such claim. (ii) EXTENSION OF TIME.The period described in clause (i) may be extended by a written agreement between the claimant and the Corporation.
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(iii) MAILING OF NOTICE SUFFICIENT.The requirements of clause (i) shall be deemed to be satisfied if the notice of any determination with respect to any claim is mailed to the last address of the claimant which appears (I) on the covered financial companys books; (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 any claim filed under clause (i) is disallowed, the notice to the claimant shall contain (I) a statement of each reason for the disallowance; and (II) the procedures available for obtaining agency review of the determination to disallow the claim or judicial determination of the claim. (B) ALLOWANCE OF PROVEN CLAIM.The Corporation shall allow any claim received on or before the date specified in the notice published under paragraph (2)(B)(i) by the Corporation from any claimant which is proved to the satisfaction of the Corporation. (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 any claimant after the date specified in the notice
184 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 claim.
published under paragraph (2)(B)(i) and such claim may be considered by the receiver if (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
(D) AUTHORITY TO DISALLOW CLAIMS. (i) IN GENERAL.The Corporation may disallow any portion of any claim by a creditor or claim of security, preference, or priority which is not proved to the satisfaction of the Corporation. (ii) PAYMENTS TO LESS THAN FULLY SECURED CREDITORS.In the case of a claim of a creditor against a covered financial company which 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 against the covered financial company; 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
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(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 or perfected security interest in the assets of the covered financial company securing any such extension of credit. (E) NO JUDICIAL REVIEW OF DETERMINATION PURSUANT TO SUBPARAGRAPH (D).No court may review the Corporation determination pursuant to subparagraph (D) to disallow a claim. (F) LEGAL EFFECT OF FILING. (i) STATUTE OF LIMITATION TOLLED.For purposes of any applicable statute of limitations, the filing of a claim with the Corporation shall constitute a commencement of an action. (ii) NO PREJUDICE TO OTHER ACTIONS.Subject to paragraph (9), the filing of a claim with the Corporation 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. (5) PROVISION FOR JUDICIAL DETERMINATION OF CLAIMS. (A) IN GENERAL.Before the end of the 60-day period beginning on the earlier of (i) the end of the period described in paragraph (4)(A)(i) (or, if extended by agreement of the Corporation and the claimant, the period
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described in paragraph (4)(A)(ii)) with respect to any claim against a covered financial company for which the Corporation is receiver; or (ii) the date of any notice of disallowance of such claim pursuant to paragraph (4)(A)(i), the claimant may file suit on a claim (or continue an action commenced before the appointment of the receiver) in the district or territorial court of the United States for the district within which the covered financial companys principal place of business is located or the United States District Court for the District of Columbia (and such court shall have jurisdiction to hear such claim). (B) STATUTE OF LIMITATIONS.If any claimant fails to file suit on such claim (or continue an action commenced before the appointment of the receiver) before the end of the 60-day period described in subparagraph (A), 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. (6) EXPEDITED DETERMINATION OF CLAIMS. (A) ESTABLISHMENT REQUIRED.The Corporation shall establish a procedure for expedited relief outside of the routine claims process established under paragraph (4) for claimants who (i) allege the existence of legally valid and enforceable or perfected security interests in assets of any covered financial company for which the Corporation has been appointed as receiver; and
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(ii) allege that irreparable injury will occur if the routine claims procedure is followed. (B) DETERMINATION PERIOD.Before the end of the 90-day period beginning on the date any 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 (II) whether such claim should be determined pursuant to the procedures established pursuant to paragraph (4); and (ii) notify the claimant of the determination, and if the claim is disallowed, provide a statement of each reason for the disallowance and the procedure for obtaining judicial determination. (C) PERIOD FOR FILING OR RENEWING SUIT.Any claimant who files a request for expedited relief shall be permitted to file a suit, or to continue such a suit filed before the appointment of the Corporation as receiver, seeking a determination of the claimants rights with respect to such security interest 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 the Corporation denies the claim. (D) STATUTE 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 or motion
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may be filed in accordance with subparagraph (B), 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 LIMITATION 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 (9), 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. (7) 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 is in writing and executed by an authorized officer or representative of the covered financial company. (8) PAYMENT OF CLAIMS. (A) IN GENERAL. The Corporation as receiver may, in its discretion and to the extent 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 Corporation pursuant to a final determination
189 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 pursuant to paragraph (6); or
(ii) determined by the final judgment of any court of competent jurisdiction. (B) PAYMENT OF DIVIDENDS ON CLAIMS.The receiver may, in the receivers 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 (in the Corporations capacity as receiver), by reason of any such payment, for failure to pay dividends to a claimant whose claim is not proved at the time of any such payment. (C) RULEMAKING AUTHORITY OF CORPORATION.The Corporation may prescribe such rules, including definitions of terms, as it deems appropriate to establish a single uniform interest rate for, or to make payments of post insolvency interest to creditors holding proven claims against the receivership estates of a covered financial company following satisfaction by the receiver of the principal amount of all creditor claims. (9) SUSPENSION OF LEGAL ACTIONS. (A) IN GENERAL.After the appointment of the Corporation as receiver or qualified receiver for a covered financial company, the Corporation may request a stay for a period not to exceed (i) 45 days, in the case of any qualified receiver; and (ii) 90 days, in the case of any receiver, in any non-criminal judicial action or proceeding to which such covered financial company is or becomes a party.
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(B) GRANT OF STAY BY ALL COURTS REQUIRED.Upon receipt of a request by the Corporation pursuant to subparagraph (A) for a stay of any non-criminal judicial action or proceeding in any court with jurisdiction of such action or proceeding, the court shall grant such stay as to all parties. (10) ADDITIONAL RIGHTS AND DUTIES. (A) PRIOR FINAL ADJUDICATION.The Corporation shall abide by any final unappealable judgment of any court of competent jurisdiction which was rendered before the appointment of the Corporation as receiver or qualified receiver. (B) RIGHTS AND REMEDIES OF RECEIVER.In the event of any appealable judgment, the Corporation as receiver or qualified receiver shall (i) have all the rights and remedies available to the covered financial company (before the appointment of the receiver or qualified receiver under section 1604) and the Corporation, including but not limited to 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 issue by any court upon assets in the possession of the receiver. (D) LIMITATION ON JUDICIAL REVIEW.Except as otherwise provided in this subsection, 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
191 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 cases;
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 or qualified receiver in connection with any covered financial company for which the Corporation is acting as receiver or qualified receiver under this section, the Corporation shall, to the greatest extent practicable, conduct its operations in a manner which (i) maximizes the net present value return from the sale or disposition of such assets; (ii) minimizes the amount of any loss realized in the resolution of
(iii) minimizes the cost to the general fund of the Treasury; (iv) mitigates the potential for serious adverse effects to the financial system and the U.S. economy; (v) ensures timely and adequate competition and fair and consistent treatment of offerors; and (vi) prohibits discrimination on the basis of race, sex, or ethnic groups in the solicitation and consideration of offers. (11) STATUTE OF LIMITATIONS FOR ACTIONS BROUGHT BY RECEIVER. (A) IN GENERAL.Notwithstanding any provision of any contract, the
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applicable statute of limitations with regard to any action brought by the Corporation as receiver or qualified receiver shall be (i) in the case of any contract claim, the longer of (I) the 6-year period beginning on the date 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 the claim accrues; or (II) the period applicable under State law. (B) DETERMINATION OF THE 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 such subparagraph shall be the later of (i) the date of the appointment of the Corporation as receiver or qualified 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 statute of limitation applicable under State law with respect to such claim has expired not more than 5 years before the appointment of the Corporation as receiver or qualified receiver, the Corporation may bring an action as receiver or qualified receiver on such claim without regard to the expiration of the statute of limitation
193 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 applicable under State law.
(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. (12) FRAUDULENT TRANSFERS. (A) IN GENERAL.The Corporation, as receiver or qualified receiver for any covered financial company, may avoid a transfer of any interest of an institution-affiliated party, or any person who the Corporation determines is a debtor of the covered financial company, in property, or any obligation incurred by such party or person, that was made within 5 years of the date on which the Corporation was appointed receiver or qualified receiver if such party or person voluntarily or involuntarily made such transfer or incurred such liability with the intent to hinder, delay, or defraud the covered financial company or the Corporation. (B) RIGHT OF RECOVERY.To the extent a transfer is avoided under subparagraph (A), 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 institution-affiliated party or person for whose benefit such transfer was made; or (ii) any immediate or mediate transferee of any such initial transferee.
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(C) RIGHTS OF TRANSFEREE OR OBLIGEE.The Corporation may not recover under subparagraph (B) (i) any transfer that takes for value, including satisfaction or securing of a present or antecedent debt, in good faith, or (ii) any immediate or mediate good faith transferee of such transferee. (D) RIGHTS UNDER THIS SUBSECTION.The rights of the Corporation as receiver or qualified receiver of a covered financial company under this subsection shall be superior to any rights of a trustee or any other party (other than any party which is a Federal agency) under title 11, United States Code. (E) DEFINITION.For purposes of this subsection, the term institution-affiliated party means (i) any director, officer, employee, or controlling stockholder of, or agent for, a covered financial company; (ii) any shareholder, consultant, joint venture partner, and any other person as determined by the Corporation (by regulation or otherwise) who participates in the conduct of the affairs of a covered financial company; and (iii) any independent contractor (including any attorney, appraiser, or accountant) who knowingly or recklessly participates in (I) any violation of any law or regulation; (II) any breach of fiduciary duty; or (III) any unsafe or unsound practice,
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which caused or is likely to cause more than a minimal financial loss to, or a significant adverse effect on, the covered financial company. (13) ATTACHMENT OF ASSETS AND OTHER INJUNCTIVE RELIEF.Subject to paragraph (14), any court of competent jurisdiction may, at the request of the Corporation, 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 65 of the Federal Rules of Civil Procedure shall apply with respect to any proceeding under paragraph (13) without regard to the requirement of such rule 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 such State provide substantially similar protections to such partys right to due process as 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 OR QUALIFIED RECEIVER.Notwithstanding
any other
provision of this subsection, any final and unappealable judgment for monetary damages entered against the Corporation as receiver or qualified receiver for a covered financial company for the breach of an agreement executed or approved by the Corporation after
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the date of its appointment shall be paid as an administrative expense of the receiver or the qualified receiver. Nothing in this paragraph shall be construed to limit the power of a receiver or qualified receiver 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 or qualified receiver shall, consistent with the accounting and reporting practices and procedures established by the Corporation, maintain a full accounting of each qualified receivership, receivership, or other disposition of any covered financial company. (B) ANNUAL ACCOUNTING OR REPORT.With respect to each receivership or qualified receivership to which the Corporation was 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 report prepared pursuant to subparagraph (B) shall be made available by the Corporation upon request to any member of the public. (D) RECORDKEEPING REQUIREMENT. (i) IN GENERAL.Except as provided in clause (ii), after the end of the 6-year period beginning on the date the Corporation is appointed as receiver of a covered financial company the Corporation may destroy any records of such covered financial company which the Corporation, in the Corporations discretion, determines to be unnecessary unless directed not to do so by a court of competent jurisdiction or governmental agency, or
197 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 prohibited by law.
(ii) OLD RECORDS.Notwithstanding clause (i), the Corporation may destroy records of a covered financial company which are at least 10 years old as of the date on which the Corporation is appointed as the receiver of such company in accordance with clause (i) at any time after such appointment is final, without regard to the 6-year period of limitation contained in clause (i). (b) PRIORITY OF EXPENSES AND UNSECURED CLAIMS. (1) IN GENERAL.Unsecured claims against a covered financial company, or the 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) Any other general or senior liability of the covered financial company (which is not a liability described under subparagraph (D) or (E)). (D) Any obligation subordinated to general creditors (which is not an obligation described under subparagraph (E)). (E) 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.
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(2) POST-RECEIVERSHIP FINANCING PRIORITY.In the event that the Corporation as receiver 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 receiver may take any action (including making payments) that does not comply with this subsection, if (A) the Corporation determines that such action is necessary to maximize the value of the assets of the covered financial company, to maximize the present value return from the sale or other disposition of the assets of the covered financial company, to minimize the amount of any loss realized upon the sale or other disposition of the assets of the covered financial company, or to contain or address serious adverse effects on financial stability or the U.S. economy; and (B) all claimants that are similarly situated under paragraph (1) receive not less than the amount provided in subsection (d)(2). (3) SECURED CLAIMS UNAFFECTED.This subsection shall not affect secured claims, 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
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(4) DEFINITIONS.As used in this subsection, the term administrative expenses of the receiver includes (A) the actual, necessary costs and expenses incurred by the receiver in preserving the assets of a covered financial company or liquidating or otherwise resolving the affairs of a covered financial company for which the Corporation has been appointed as receiver; and (B) any obligations that the receiver determines are necessary and appropriate to facilitate the smooth and orderly liquidation or other resolution of the covered financial company. (c) PROVISIONS RELATING TO CONTRACTS ENTERED INTO BEFORE APPOINTMENT OF RECEIVER OR QUALIFIED RECEIVER. (1) AUTHORITY TO REPUDIATE CONTRACTS.In addition to any other rights a receiver or qualified receiver may have, the Corporation as receiver or qualified 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 receiver or qualified receiver, in the receivers or qualified receivers discretion, determines to be burdensome; and (C) the disaffirmance or repudiation of which the receiver or qualified receiver determines, in the receivers or qualified receivers discretion, will promote the orderly administration of the covered financial companys affairs. (2) TIMING OF REPUDIATION.The receiver or qualified receiver appointed for any covered financial company under section 1604 shall determine whether or not to
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exercise the rights of repudiation under this subsection within a reasonable period following such appointment. (3) CLAIMS FOR DAMAGES FOR REPUDIATION. (A) IN GENERAL.Except as otherwise provided in subparagraph (C) and paragraphs (4), (5), and (6), the liability of the receiver or qualified receiver 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 receiver or qualified 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
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other reasonable measures of damages utilized in the industries for such contract and agreement claims; and (ii) paid in accordance with this subsection and subsection (d) except as otherwise specifically provided in this subsection. (4) LEASES UNDER WHICH THE COVERED FINANCIAL COMPANY IS THE LESSEE. (A) IN GENERAL.If the receiver or qualified receiver disaffirms or repudiates a lease under which the covered financial company was the lessee, the receiver or qualified 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 such subparagraph applies shall (i) be entitled to the contractual rent accruing before the later of the
(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 subsection and subsection (d). (5) LEASES UNDER WHICH THE COVERED FINANCIAL COMPANY IS THE LESSOR.
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(A) IN GENERAL.If the receiver or qualified receiver 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 such subparagraph (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; (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 receiver or qualified receiver shall not be liable to the lessee 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). (6) CONTRACTS FOR THE SALE OF REAL PROPERTY.
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(A) IN GENERAL.If the receiver or qualified receiver repudiates any contract (which meets the requirements of subsection (a)(7)) 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 such subparagraph (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 receiver or qualified 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
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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 receiver or qualified 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 receiver or qualified 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 or qualified receiver, any claim of such person for services performed before the appointment of the receiver or qualified receiver shall be (i) a claim to be paid in accordance with subsections (a), (b) and (d); and (ii) deemed to have arisen as of the date the receiver or qualified receiver was appointed.
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(B) SERVICES PERFORMED AFTER APPOINTMENT AND PRIOR TO

REPUDIATION.If,
in the case of any contract for services described in
subparagraph (A), the receiver or qualified receiver accepts performance by the other person before the receiver or qualified receiver makes 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 or qualified receivership. (C) ACCEPTANCE OF PERFORMANCE NO BAR TO SUBSEQUENT
REPUDIATION.The
acceptance by any receiver or qualified receiver of services
referred to in subparagraph (B) in connection with a contract described in such subparagraph shall not affect the right of the receiver or qualified 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 paragraphs (9) and (10) of this subsection and notwithstanding any other provision of this section (other than subsection (a)(7)), any other Federal law, or the law of any State, no person shall be stayed or prohibited from exercising (i) any right such person has to cause the termination, liquidation, or acceleration of any qualified financial contract with a covered financial company which arises upon the appointment of the Corporation as receiver for such covered financial company at any time after such
206 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 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). (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 and agreements described in clause (i), including any master agreement for such contracts or agreements. (B) APPLICABILITY OF OTHER PROVISIONS.Subsection (a)(9) shall apply in the case of any judicial action or proceeding brought against any receiver referred to in subparagraph (A), or the covered financial company for which such receiver was appointed, by any party to a contract or agreement described in subparagraph (A)(i) with such company. (C) CERTAIN TRANSFERS NOT AVOIDABLE. (i) IN GENERAL.Notwithstanding paragraph (11), 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 such or as receiver or qualified receiver of a covered financial company, may not avoid any transfer of money or other property in connection with 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
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qualified financial contract with a covered financial company if the Corporation determines that the transferee had actual intent to hinder, delay, or defraud such company, the creditors of such company, or any receiver or qualified receiver appointed for such company. (D) CERTAIN CONTACTS 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
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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 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 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
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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 subclause (I), (III), (IV), (V), (VI), (VII), (VIII), (IX), or (X), 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 subclause (I), (III), (IV), (V), (VI), (VII), (VIII), (IX), or (X); 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
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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; (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
211 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 referred to in this clause;
(IX) a master agreement that provides for an agreement or transaction referred to in subclause (I), (II), (III), (IV), (V), (VI), (VII), or (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 subclause (I), (II), (III), (IV), (V), (VI), (VII), or (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 more than 2 days after the date the contract is entered into, including a
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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 subclauses (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 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.
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(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 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 shall mean 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 Federal Reserve Board) 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
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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 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
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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
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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 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 agreements or transactions referred to in subclause (I), (II), (III), (IV), or (V), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause. (vii) DEFINITIONS RELATING TO DEFAULT. When used in this
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(I) The term default shall mean, with respect to a covered financial company, any adjudication or other official determination by any court of competent jurisdiction, or other public authority pursuant to which a conservator, receiver, or other legal custodian is appointed; and (II) The term in danger of default shall mean 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 (i) the covered financial company is not likely to be able to pay its obligations in the normal course of business; and (ii) 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 (i) the covered financial company has incurred or is likely to incur losses that will deplete all or substantially all of its capital; and
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DISCUSSION DRAFT 10/27/2009 (ii) 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 preceding clause of this subparagraph (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 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 covered financial companys equity of redemption. (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) CERTAIN PROTECTIONS IN EVENT OF APPOINTMENT OF QUALIFIED
RECEIVER.Notwithstanding
any other provision of this section (other than
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paragraph (10) of this subsection and subsection (a)(7) of this section), any other Federal law, or the law of any State, no person shall be stayed or prohibited from exercising (i) any right such person has to cause the termination, liquidation, or acceleration of any qualified financial contract with a covered financial company in a qualified receivership based upon a default under such financial contract which is enforceable under applicable noninsolvency law; (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 values, payment amounts, or other transfer obligations arising under or in connection with such qualified financial contracts. (F) 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 in accordance with paragraphs (9) and (10) of this subsection or to disaffirm or repudiate any such contract in accordance with subsection (c)(1) of this section. (G) WALKAWAY CLAUSES NOT EFFECTIVE. (i) IN GENERAL.Notwithstanding the provisions of subparagraphs (A) and (E) and sections 403 and 404 of the Federal Deposit Insurance
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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 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 the receiver is appointed until the earlier of (I) the time 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 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 such partys status 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 a receiver or qualified receiver of such covered financial company, and not as a result of a partys exercise of any right to offset, setoff, or net obligations that exist under the contract, any other contract between those parties, or
221 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 applicable law.
(H) RECORDKEEPING.The Corporation, in consultation with the Federal Reserve Board, may prescribe regulations requiring that the covered financial company maintain such records with respect to qualified financial contracts (including market valuations) as the Corporation determines to be necessary or appropriate in order to assist the receiver or qualified receiver of the covered financial company in being able to exercise its rights and fulfill its obligations under this paragraph or paragraph (9) or (10). (9) TRANSFER OF QUALIFIED FINANCIAL CONTRACTS. (A) IN GENERAL.In making any transfer of assets or liabilities of a covered financial company in default which includes any qualified financial contract, the receiver or qualified 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,
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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 receiver or qualified 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.
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(C) TRANSFER OF CONTRACTS SUBJECT TO THE RULES OF A CLEARING

ORGANIZATION.In
the event that a receiver or qualified receiver transfers any
qualified financial contract and related claims, property, and credit enhancements 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, 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 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.If (i) the receiver or qualified receiver for a covered financial company in default or in danger of default transfers any assets and liabilities of the covered financial company; and (ii) the transfer includes any qualified financial contract, the receiver or qualified receiver shall notify any person who is a party to any such contract of such transfer by 5:00 p.m. (eastern time) on the business day following the date of the appointment of the receiver in the case of a receivership, or the business day following such transfer in the case of a qualified receivership.
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(B) CERTAIN RIGHTS NOT ENFORCEABLE. (i) RECEIVERSHIP.A 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) of this subsection solely by reason of or incidental to the appointment under this section of a receiver for the covered financial company (or the insolvency or financial condition of the covered financial company for which the receiver has been appointed) (I) until 5:00 p.m. (eastern time) on the business day following the date of the appointment of the receiver; or (II) after the person has received notice that the contract has been transferred pursuant to paragraph (9)(A). (ii) QUALIFIED RECEIVERSHIP.A person who is a party to a qualified financial contract with a covered financial company may not exercise any right such person has to terminate, liquidate, or net such contract under paragraph (8)(E) of this subsection or section 403 of Federal Deposit Insurance Corporation Improvement Act of 1991 solely by reason of or incidental to the appointment under this section of a qualified receiver for the covered financial company (or the insolvency or financial condition of the covered financial company for which the qualified receiver has been appointed). (iii) NOTICE.For purposes of this paragraph, the receiver or qualified receiver for a covered financial company shall be deemed to
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have notified a person who is a party to a qualified financial contract with such covered financial company if the receiver or qualified receiver 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 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 a receiver or qualified receiver with respect to any qualified financial contract to which a covered financial company is a party, the receiver or qualified receiver for such covered financial 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).
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(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 where such an interest is taken in contemplation of the companys insolvency or with the intent to hinder, delay, or defraud the company or the creditors of such company; or (B) legally enforceable interest in customer property. (13) AUTHORITY TO ENFORCE CONTRACTS. (A) IN GENERAL.The receiver or qualified receiver may enforce any contract, other than a directors or officers liability insurance contract or 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 or the appointment of or the exercise of rights or powers by a receiver or qualified receiver. (B) CERTAIN RIGHTS NOT AFFECTED.No provision of this paragraph may be construed as impairing or affecting any right of the receiver or qualified receiver to enforce or recover under a directors or officers liability insurance contract or financial institution bond under other applicable law. (C) CONSENT REQUIREMENT. (i) IN GENERAL.Except 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
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party, 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 receiver or qualified receiver, as appropriate, of the covered financial company during the 45-day period beginning on the date of the appointment of the qualified receiver, or during the 90-day period beginning on the date of the appointment of the receiver, as applicable. (ii) CERTAIN 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 receiver or qualified receiver to fail to comply with otherwise enforceable provisions of such contract. (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
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as to challenge or affect the characterization, definition, or treatment of any similar terms under any other statute, regulation, or rule, including, but not limited, to 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. (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 which the Corporation determines to utilize with respect to a covered financial company, including transactions authorized under subsection (h), this subsection shall govern the rights of the creditors of such covered financial company. (2) MAXIMUM LIABILITY.The maximum liability of the Corporation, acting as receiver or in any other capacity, to any person having a claim against the receiver or the covered financial company for which such receiver is appointed shall equal the amount such claimant would have received if (A) a determination had not been made under section 1603(b) with respect to the covered financial company; and (B) the covered financial company had been liquidated under title 11, United States Code, or any case related to title 11, United States Code (including but not limited to a case initiated by the Securities Investor Protection Corporation with respect to a financial company subject to the Securities Investor Protection Act of 1970), or any State insolvency law. (3) ADDITIONAL PAYMENTS AUTHORIZED.
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(A) IN GENERAL.The Corporation may, as receiver and with the approval of the Secretary, make additional payments or credit additional amounts to or with respect to or for the account of any claimant or category of claimants of a covered financial company if the Corporation determines that such payments or credits are necessary or appropriate to (i) minimize losses to the receiver from the resolution of the covered financial company under this section; or (ii) prevent or mitigate serious adverse effects to financial stability or the United States economy. (B) 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 section or at the request of the receiver or qualified receiver appointed for a covered financial company, no court may take any action to restrain or affect the exercise of powers or functions of the receiver or qualified receiver hereunder. (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
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(A) acting as receiver or qualified receiver of such covered financial company; (B) acting based upon a suit, claim, or cause of action purchased from, assigned by, or otherwise conveyed by such receiver or qualified 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 section 1604. (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 covered financial companys director, officer, employee, agent, attorney, accountant, appraiser, 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 covered financial companys assets shall include principal losses and appropriate interest. (h) BRIDGE FINANCIAL COMPANIES. (1) ORGANIZATION. (A) PURPOSE.The Corporation, as receiver of one or more covered financial companies may organize one or more bridge financial companies in
231 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 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.If the Corporation is appointed as receiver for a covered financial company, the Corporation 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
232 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Corporation.
(C) ARTICLES OF ASSOCIATION.The articles of association and organization certificate of a bridge financial 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, but not limited to, 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.
(i) IN GENERAL.Notwithstanding any other provision of Federal law or the law of any State, 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,
233 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 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 as 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
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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. (3) INTERESTS IN AND ASSETS AND OBLIGATIONS OF COVERED FINANCIAL
COMPANY.Notwithstanding
paragraphs (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 a receiver has been appointed may have to any shareholder, member, general 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
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in default at such times and for such purposes as the Corporation may, in its discretion, determine. (5) TRANSFER OF ASSETS AND LIABILITIES. (A) TRANSFER OF ASSETS AND LIABILITIES.The Corporation, as receiver, 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). (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)(B). (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
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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 actions (including making payments) that do not comply with this subparagraph, if (i) the Corporation determines that such actions are necessary to maximize the value of the assets of the covered financial company, to maximize the present value return from the sale or other disposition of the assets of the covered financial company, to minimize the amount of any loss realized upon the sale or other disposition of the assets of the covered financial company, or to contain or address serious adverse effects to financial stability or the U.S. economy; and (ii) all creditors that are similarly situated under subsection (b)(1) receive not less than the amount provided in subsection (d)(2). (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
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liabilities of a covered financial company shall be stayed from further proceedings for a period of up to 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 is in writing and executed by an authorized officer or representative of the covered financial company. (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
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benefits as are obtained through employment with the Corporation or such Federal instrumentality. (9) 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. (10) FEDERAL AGENCY APPROVAL; ANTITRUST REVIEW. (A) IN GENERAL.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, 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 a filing is required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with the Department of Justice or the Federal Trade Commission, the waiting period shall expire not later than the 30th day following such filing notwithstanding any other provision of Federal law or any attempt by any Federal agency to extend such waiting period, and no further request for information by any Federal agency shall be permitted. (B) EMERGENCY.If the Secretary, in consultation with the Chairman of
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the Federal Reserve Board, has found that the Corporation must act immediately to prevent the probable failure of the covered financial company involved, the approvals and filings referred to in subparagraph (A) shall not be required and the transaction may be consummated immediately by the Corporation. (11) DURATION OF BRIDGE FINANCIAL COMPANY.Subject to paragraphs (12), (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 it was granted a charter. The Corporation may, in its discretion, extend the status of the bridge financial company as such for 3 additional 1year periods. (12) TERMINATION OF BRIDGE FINANCIAL COMPANY STATUS.The status of any bridge financial company as such shall terminate upon the earliest of (A) 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 substantially all of the assets of the bridge financial company by a company that is not a bridge
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financial company, or other entity as permitted under applicable law; and (E) the expiration of the period provided in paragraph (11), or the earlier dissolution of the bridge financial company as provided in paragraph (14). (13) EFFECT OF TERMINATION EVENTS. (A) MERGER OR CONSOLIDATION.A merger or consolidation as provided in paragraph (12)(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 (12)(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 State or Federal 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 State or Federal 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
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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 (12)(C), the company shall have all of the rights, powers, and privileges under its constituent documents and applicable State or Federal 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 State or Federal 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 all or substantially all of the assets of the bridge financial company, as provided in paragraph (12)(D), at the election of the Corporation the bridge financial company may retain its status as such for the period provided in paragraph (11) 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 (12), the
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charter of the resulting company shall be amended to reflect the termination of bridge financial company status, if appropriate. (14) DISSOLUTION OF BRIDGE FINANCIAL COMPANY. (A) IN GENERAL.Notwithstanding any other provision of State or Federal law, if a bridge financial companys status as such has not previously been terminated by the occurrence of an event specified in subparagraph (A), (B), (C), or (D) of paragraph (12) (i) the Corporation may, in its discretion, dissolve the bridge financial company in accordance with this paragraph at any time; and (ii) the Corporation shall promptly commence dissolution proceedings in accordance with this paragraph upon the expiration of the 2-year period following the date the bridge financial company was chartered, or any extension thereof, as provided in paragraph (11). (B) PROCEDURES.The Corporation shall remain the receiver of a bridge financial company for the purpose of dissolving the bridge financial company. The Corporation as such receiver 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. 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 a receiver of a covered financial company 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
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of any State agency or other Federal agency. (15) 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. (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
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equal lien is proposed to be granted. (D) BURDEN OF PROOF.In any hearing under this subsection, the Corporation has the burden of proof on the issue of adequate protection. (16) 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.Whenever the Corporation has been appointed as receiver or qualified receiver for a covered financial company, the Federal Reserve Board and the companys primary federal regulatory agency, if any, shall each make all records relating to the company available to the receiver or qualified receiver which may be used by the receiver or qualified receiver in any manner the receiver or qualified receiver determines to be appropriate. (j) EXPEDITED PROCEDURES FOR CERTAIN CLAIMS. (1) TIME FOR FILING NOTICE OF APPEAL.The notice of appeal of any order, whether interlocutory or final, entered in any case brought by the Corporation against a covered financial companys director, officer, employee, agent, attorney, accountant, or appraiser 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.
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(2) SCHEDULING.A court of the United States shall expedite the consideration of any case brought by the Corporation against a covered financial companys director, officer, employee, agent, attorney, accountant, or appraiser 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 or qualified receiver of 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 or qualified
246 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 receiver for a covered financial company.
(m) LIQUIDATION OF CERTAIN COVERED FINANCIAL COMPANIES OR BRIDGE FINANCIAL COMPANIES.Notwithstanding any other provision of law (other than a conflicting provision of this section), 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 (1) in the case of any covered financial company or bridge financial company that is or has a subsidiary that is a stockbroker (as that term is defined in section 101 of title 11 of the United States Code) but is not a member of the Securities Investor Protection Corporation, apply the provisions of subchapter III of chapter 7 of title 11 of the United States Code in respect of the distribution to any customer of all customer name securities and customer property (as such terms are defined in section 741 of such title 11) as if such covered financial company or bridge financial company were a debtor for purposes of such subchapter; or (2) in the case of any covered financial company or bridge financial company that is a commodity broker (as that term is defined in section 101 of title 11 of the United States Code), apply the provisions of subchapter IV of chapter 7 of title 11 of the United States Code in respect of the distribution to any customer of all customer property (as such terms are defined in section 761 of such title 11) as if such covered financial company or bridge financial company were a debtor for purposes of such subchapter. (n) SYSTEMIC RESOLUTION FUND. (1) ESTABLISHMENT.There is established in the Treasury a separate fund called the Systemic Resolution Fund, which shall be available without further appropriation for
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the cost of actions authorized by this title upon a determination made under section 1603(b) to the Corporation to carry out the authorities contained in this title, including the payment of administrative expenses, the Corporations payment of principal and interest on obligations issued under paragraph (3), and the exercise of authorities under section 1604. (2) PROCEEDS.Amounts received by the Corporation (including amounts borrowed under paragraph (3) and assessments received under subsection (o), but excluding amounts received by any covered financial company when the Corporation is acting in its capacity as receiver or qualified receiver for such company, and excluding amounts credited to the appropriate financing account as a means of financing credit activity, as applicable) shall be deposited into the Fund, subject to apportionment. (3) CAPITALIZATION OF FUND. (A) CORPORATION AUTHORIZED TO ISSUE OBLIGATIONS.In order to capitalize the Fund upon the Secretary making the determination provided for in section 1603(b), the Corporation is authorized to issue obligations to the Secretary. (B) SECRETARY AUTHORIZED TO PURCHASE OBLIGATIONS.The Secretary may, in the Secretarys discretion and under such terms and conditions that 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 hereafter 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
248 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 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 not less than a rate determined by the Secretary, taking into consideration the current average yield on outstanding marketable obligations of the United States of comparable maturity. (D) SECRETARY AUTHORIZED TO SELL OBLIGATIONS.The Secretary may sell, upon such terms and conditions and at such price or prices 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 covered into the Treasury as miscellaneous receipts. (o) RECOVERY OF EXPENDED FUNDS FROM FINANCIAL COMPANIES. (1) RISK-BASED ASSESSMENTS.The Corporation shall recover the amount of funds expended out of the Fund under subsection (n) and which have not otherwise been recouped. Steps to recover such amounts shall include one or more risk-based assessments on financial companies in such amount and manner, and subject to such terms and conditions that the Corporation determines, with the concurrence of the Secretary and the Federal Reserve Board, are necessary to pay in full the obligations issued by Corporation to the Secretary, within 60 months from the date of the Secretarys determination under section 1603(b). The Corporation may, with the approval of the
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Secretary and the Federal Reserve Board, extend this time period if the Corporation determines that an extension is necessary to avoid having a serious adverse effect on the financial system or economic conditions in the United States. (2) ASSESSMENT THRESHOLD AND GRADUATED ASSESSMENT RATE. The Corporation shall not assess any financial company whose total assets on a consolidated basis are less than $10 billion. The Corporation shall assess any financial company with $10 billion or more in total consolidated assets on a graduated basis that assesses financial companies with greater assets at a higher rate. (3) RISK-BASED ASSESSMENT CONSIDERATIONS.In imposing assessments under paragraphs (1) and (2), the Corporation shall (A) take into account economic conditions generally affecting financial companies so as to allow assessments to be lower during less favorable economic conditions; (B) take into account any assessments imposed on a subsidiary of a financial company that is (i) an insured depository institution pursuant to section 7 or section 13(c)(4)(G) of the Federal Deposit Insurance Act (12 U.S.C. 1817 and 1823(c)(4)(G)); (ii) a member of the Securities Investor Protection Corporation pursuant to section 4 of the Securities Investor Protection Act of 1970 (15 U.S.C. 78ddd); or (iii) an insurance company pursuant to applicable State law to cover (or reimburse payments made to cover) the costs of rehabilitation,
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liquidation, or other State insolvency proceeding with respect to one or more insurance companies. (C) take into account the risks presented by the financial company to financial stability or the U.S. economy and the extent to which the financial company has, benefited, or likely would benefit, from the resolution of a financial company under this Act; (D) take into account such other factors as the Corporation deems appropriate; (E) distinguish among different classes of assets or different types of financial companies in order to establish comparable assessment bases among financial companies subject to this subsection; and (F) establish the parameters for the graduated assessment regime described in paragraph (2). (4) COLLECTION OF INFORMATION.The Corporation may impose on financial companies such collection of information requirements that the Corporation deems necessary to carry out this subsection after a determination under section 1603(b). (5) RULEMAKINGThe Corporation shall, in consultation with the Secretary and the Federal Reserve Board, prescribe regulations to carry out this subsection. (p) NO FEDERAL STATUS. (1) AGENCY STATUS.A covered financial company (or any covered subsidiary thereof) that is placed into receivership or qualified receivership is not a department, agency, or instrumentality of the United States for purposes of statutes that confer powers on or impose obligations on government entities.
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(2) EMPLOYEE STATUS.Interim directors, directors, officers, employees, or agents of a covered financial company that is placed into receivership or qualified receivership are not, solely by virtue of service in any such capacity, officers or employees of the United States. Any employee of the Corporation, acting as receiver or qualified receiver, or of any Federal agency who serves at the request of the receiver or qualified receiver as an interim director, director, officer, employee, or agent of a covered financial company that is placed into receivership or qualified receivership shall not (A) 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; (B) receive any salary or benefits for service in any such capacity with respect to a covered financial company that is placed into receivership or qualified receivership in addition to such salary or benefits as are obtained through employment with the Corporation or other Federal agency. SEC. 1610. CLARIFICATION OF PROHIBITION REGARDING CONCEALMENT OF ASSETS FROM QUALIFIED RECEIVER, RECEIVER, OR LIQUIDATING AGENT. (a) IN GENERAL. Section 1032 of title 18, United States Code, is amended in paragraph (1) by deleting or before the National Credit Union Administration Board, and by inserting immediately thereafter or the Corporation, as defined in section 1602 of the Resolution Authority for Large, Interconnected Financial Companies Act of 2009 (___U.S.C. ___(1)(A)),. (b) CONFORMING CHANGE.The title of section 1032 of title 18, United States Code, is amended by deleting of financial institution.
252 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 SEC. 1611. MISCELLANEOUS PROVISIONS.
(a) BANKRUPTCY CODE AMENDMENTS.Section 109(b)(2) of title 11 of the United States Code is amended by adding covered financial company as that term is defined in section 1602(5) of the Resolution Authority for Large, Interconnected Financial Companies Act of 2009, after a domestic insurance company. (b) FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT. (1) Section 141 of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 1823(c)(4)(G)(i) is amended by inserting at the end thereof the following new sentence: The determination with regard to the Corporations exercise of authority under this subparagraph shall apply to only an insured depository institution except where severe financial conditions exist which threaten the stability of a significant number of insured depository institutions. (2) Section 403(a) of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 4403(a)) is amended by inserting section 1609(c) of the Resolution Authority for Large, Interconnected Financial Companies Act of 2009, section 1367 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4617(d)), after section 1821(e) of this title.
SUBTITLE H ADDITIONAL IMPROVEMENTS FOR FINANCIAL CRISIS MANAGEMENT

SECTION 1701. ADDITIONAL IMPROVEMENTS FOR FINANCIAL CRISIS MANAGEMENT.
253 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Section 13 of the Federal Reserve Act is amended in the 3rd undesignated paragraph (12 U.S.C. 343) to read as follows: In unusual and exigent circumstances, the Board of Governors of the Federal Reserve System, by the affirmative vote of not less than five members and with the written concurrence of the Secretary of the Treasury, may authorize any Federal reserve bank, during such periods as the said board may determine, at rates established in accordance with the provisions of section 14, subdivision (d) of this Act (12 U.S.C. 357), to discount for an individual, partnership, or corporation, notes, drafts, and bills of exchange when such notes, drafts, and bills of exchange are indorsed or otherwise secured to the satisfaction of the Federal reserve bank: Provided that the Board of Governors of the Federal Reserve System may authorize a Federal reserve bank to discount notes, drafts, or bills of exchange under this section only as part of a broadly available credit or other facility and may not authorize a Federal Reserve bank to discount notes, drafts, or bills of exchange for only a single and specific individual, partnership, or corporation: And provided further that before discounting any such note, draft, or bill of exchange for an individual, a partnership or corporation the Federal reserve bank shall obtain evidence that such individual, partnership, or corporation is unable to secure adequate credit accommodations from other banking institutions. All discounts under this paragraph for individuals, partnerships, or corporations shall be subject to such limitations, restrictions, and regulations as the Board of Governors of the Federal Reserve System may prescribe.
Additional Amendments for the Investor Protection Act of 2009 A na m nt v Po i c 00

Davis, Greg to: undisclosed-recipients:; D s g
10/28/2009 02:03 PM
(b)(6)
- 10-27-28-09 Markup Roster.pdf Bachus_103_001_IPA.PDF
- Hensarling Second Degree to Frank Managers.pdf Jenkins-Garrett_001_xml.pdf Budget Revised.pdf Frank_003_xml.pdf
- ROYCE_001_IPA.PDF
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a
- Bachus 003- Definition of Customer- IPA.PDF - Bean Bean amendment to IPA.PDF - DRIEHAUS_001_xml.pdf - IPA_MAFFEI_002_xml.pdf - Maloney-Garrett_002_xml.pdf - Neugebauer Garrett IPA SEC - ROYCE_002_IPA.PDF
sivaD drehpehS yrogerG
October 28, 2009 9:37 AM
Committee on Financial Services

Committee on Financial Services Markup of Pending Legislation October 27-28, 2009
October 1, 2009, Discussion Draft of the Investor Protection Act of 2009 (to be reported as H.R. 3817)
*Frank/Kanjorski Castle/Speier Perlmutter Adler Waters Kilroy 001 001 001 002 003 001 Managers amendment Study on SEC revolving door Study of high-frequency trading Exemption for smaller companies from attestation requirements SEC authority to issue rules on proxy access Additional responsibilities to secure delivery of dividends, interest, and other valuable property rights Higher SIPC payouts with respect to pension plans Authority to contract for collection of delinquent judgments and orders Investment advisory committee membership GAO study of financial planning Clarification regarding liquidation proceedings Harmonization of enforcement and remedy regulations Nationwide service of subpoenas Biannual rather than quarterly reporting GAO study of financial planning Securities clarification Fiduciary duty clarification Independent custodial requirements Clearing services Analysis of rule regarding smaller reporting companies Senior investment protection Strike section 502 Second degree amendment to Frank 001 Creation of ombudsman for the PCAOB Disclosure of votes of institutional investment managers Reporting requirements Organization and conduct of the divisions and offices of the Securities and Exchange Commission Ombudsman Streamlining of SEC filing procedures Financial reporting forum Comptroller General study to review securities arbitration system Commission study on disclosure to retail customers before purchase of products or services Congressional access to information Capital Markets Safety Board
Maffei/Ellison Posey Waters Capuano Klein Bachus Campbell Campbell Capuano Ellison Ellison Foster Garrett Garrett Hodes Hensarling Hensarling Jenkins/Garrett Kilroy McCarthy (CA) McCarthy (CA)
001 001 001 001 001 001 091 092 001 001 002 001 063 003B 001 143 101 001 002
001
McCarthy (CA) Meeks Miller (CA) Neugebauer Perlmutter
028 025 001 002 049
Putnam Royce
001 001
October 28, 2009 9:37 AM
Royce McCarthy (NY) Maloney/Garrett Neugebauer/Garrett Maffei Bachus Driehaus
002 002 002 003 002 003 001
Administration and enforcement Study on enhancing investment advisor examinations Study on internal control evaluation and reporting cost burdens on smaller issurers SEC budget revised Second degree to Managers amendment Definition of customer Registration of municipal financial advisors
H.R. 3818, Private Fund Investment Advisers Registration Act of 2009, ordered reported to the House, as amended, with a favorable recommendation by a record vote of 67 yeas and 1 nay.
*Kanjorski/Frank *Peters Himes Lucas Kosmas Bachus Capito/Paulsen Garrett Bachmann 001 001 001 001 001 011 001 003 009 Managers amendment Exemption of and reporting by certain private fund advisers Qualified client standard Commodity trading advisors exemption Transition period and effective date Client definition Small business advisory exemption GAO study Transition rule Agreed to, voice vote Offered and withdrawn Agreed to, voice vote Offered and withdrawn Agreed to, voice vote Agreed to, voice vote Agreed to, voice vote Agreed to, voice vote Agreed to, voice
October 28, 2009 9:37 AM
McCarthy (CA) Garrett Hensarling Hensarling Hensarling 003 202 303 002 Registration level Exemption of hedge fund advisers Exemption of private equity Strike systemic risk
Peters/Meeks/Garrett
001 Revised
Exemption and reporting by certain private fund advisers
vote Not agreed to, voice vote Not offered Not agreed to, voice vote Not offered Not agreed to, record vote, 24 yeas, 43 nays Agreed to, voice vote
Discussion draft (revised) of October 16, 2009, of the Accountability and Transparency in Rating Agencies Act (to be reported as H.R. 3890)Vote on ordering reported pending
*Speier Ackerman Kanjorski/Frank Kilroy Kilroy Kilroy Kilroy Foster 001 001 349 001 004 002 003 001 (offered Enbloc with 002 002 (offered Enbloc with 001 003 001 002 038 037 004 001 002 003 024 Elimination of exemption from fair disclosure rule Symbols conform to State laws or regulations requirement Managers amendment Publication of rating histories on the Edgar system Effect of Rule 436(G) Alternative methodologies to assess credit risk Independent directors SEC study on meaningful multi digit rating symbols SEC study on ratings standardization Agreed to, voice vote Offered and withdrawn Agreed to, voice vote Agreed to, voice vote Agreed to, voice vote Agreed to, voice vote Not agreed to, voice vote Agreed to, enbloc, voice vote (See above)
Foster
Foster/Lynch Frank/Kanjorski Garrett/Frank/ Bachus Kanjorski/Capuano Kanjorski/Capuano Waters Lynch Speier Speier Meeks
Advisory board Mandatory Removal of statutory references to credit ratings
Compensation of compliance officer Statistical credit rating organization attestation Prohibition on conflicts Exception
McHenry Bachus
022 001
Disclosures with respect to structured securities Change to designation
Agreed to, voice vote Not offered Agreed to, voice vote Not offered Not offered Agreed to, voice vote Agreed to, voice vote Agreed to, voice vote Agreed to, voice vote Agreed to, as modified, voice vote Agreed to, voice vote Agreed to, voice
October 28, 2009 9:37 AM
Hensarling McCarthy (CA) Sherman Sherman Garrett Donnelly Sherman/Lynch Sherman
144
Study of credit ratings SEC study of market barriers
vote Agreed to, voice vote Agreed to, voice vote Offered and withdrawn Not agreed to, voice vote Agreed to, voice vote Offered and withdrawn Offered and withdrawn
001 002 001 001 003 002 Revised
Waiver of First Amendment defense Requirement of contracts for credit ratings
Commission staffing and rulemaking authority Initial credit rating assignments Requirement of contracts for credit ratings
*Indicates amendment filed prior to deadline.
F:\BJY\111FS\IPA\ROYCE_001.XML
AMENDMENT OFFERED
BY
TO
H.R.
MR. ROYCE
[amendment to the IPA discussion draft of October 1, 2009]
Insert at the end of title III the following new section (and conform the table of contents accordingly): 1 2
SEC. 305. CAPITAL MARKETS SAFETY BOARD.
There is established within the Securities and Ex-
3 change Commission an office to be known as the Capital 4 Markets Safety Board whose purpose shall be to conduct 5 investigations, at the direction of the Commission, of 6 failed institutions registered with the Commission, to de7 termine what caused such institutions to fail. Upon the 8 conclusion of an investigation, the Board shall make avail9 able on the Commissions website a report of its findings, 10 including recommendations regarding how others can 11 avoid similar mistakes. No information that may com12 promise an ongoing Federal investigation shall be made 13 available in any such report.
f:\VHLC\102709\102709.102.xml October 27, 2009 (10:59 a.m.)
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F:\BJY\111FS\IPA\ROYCE_002.XML
AMENDMENT OFFERED
BY
TO
H.R.
MR. ROYCE
Page 18, line 2, strike The Securities and insert (a) IN GENERAL.The Securities. Page 30, after line 13, insert the following: 1 (b) ADMINISTRATION
AND
ENFORCEMENT.The Se-
2 curities and Exchange Commission shall establish a sepa3 rate office within the Commission to administer and en4 force the provisions of section 21F of the Securities Ex5 change Act of 1934, as added by subsection (a). Such of6 fice shall report annually to Congress on its activities, 7 whistleblower complaints, and the response of the Com8 mission to such complaints.
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F:\MWB\111FS\IPA\IPA_003.XML
AMENDMENT
TOBER OF
TO THE
DISCUSSION DRAFT
OF
OC -
1, 2009 [INVESTOR PROTECTION ACT
2009] OFFERED
BY
Page 86, after line 16, insert the following new section: 1 2 3
SEC. 414. INVESTMENT ADVISERS SUBJECT TO STATE AUTHORITIES.
Section 203A(a) of the Investment Advisers Act of
4 1940 (15 U.S.C. 80b-3a(a)) is amended 5 6 7 8 9 10 11 12 13 14 15 16 (1) by redesignating paragraph (2) as paragraph (3); and (2) by inserting after paragraph (1) the following new paragraph: (2) TREATMENT
OF CERTAIN MID-SIZED IN-
VESTMENT ADVISERS.Notwithstanding
paragraph
(1), an investment adviser that (A) is regulated and examined, or required to be regulated and examined, by a State; and (B) has assets under management between
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2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 (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, shall register with, and be subject to examination by, such State. The Commission shall publish a list of the States that regulate and examine, or require regulation and examination of, investment advisers to which the requirements of this paragraph apply..
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AMENDMENT TO THE DISCUSSION DRAFT OF OCTOBER 1, 2009 [INVESTOR PROTECTION ACT OF 2009] OFFERED BY MR. BACHUS of ALABAMA
Page 10, at the end of line 14, insert the following: , 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.
F:\BJY\111FS\IPA\103_001.XML
AMENDMENT OFFERED
BY
TO
H.R.
Page 11, strike lines 11 through 25 and insert the following: 1 2

EDY
(b) HARMONIZATION
OF
ENFORCEMENT
AND
REM-
REGULATIONS.Section 15 of the Securities Ex-
3 change Act of 1934, as amended by subsection (a), is fur4 ther amended by adding at the end the following new sub5 section: 6 7
EDY
(m) HARMONIZATION
OF
ENFORCEMENT
AND
REM-
REGULATIONS.The Commission shall issue regula-
8 tions to ensure, to the extent practicable, that the enforce9 ment options and remedies available for violations of the 10 standard of conduct applicable to a broker or dealer pro11 viding investment advice to a retail customer are commen12 surate with those enforcement options and remedies avail13 able for violations of the standard of conduct applicable 14 to investment advisers under the Investment Advisers Act 15 of 1940. . 16 17 (c) MISCELLENEOUS
MENTS.The AND
CONFORMING AMEND-
Securities Exchange Act of 1934 is amend-
18 ed
f:\VHLC\102609\102609.423.xml October 26, 2009 (7:24 p.m.) (453348|1)
2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (1) in section 3(a)(3)(B) (15 U.S.C.
78c(a)(3)(B)) by adding ,the Investment Advisers Act of 1940, after the provisions of this title; (2) in section 15A (A) in subsection (b), by inserting or the Investment Advisers Act of 1940 after purposes of this title each place it appears; (B) in subsection (b)(7), by inserting or the Investment Advisers Act of 1940 after any provision of this title; and (C) in subsection (h)(1)(B), by inserting or the Investment Advisers Act of 1940 after the specific provision of this title; and (3) in section 19 (A) In subsection (b)(3)(C) by inserting or the Investment Advisers Act of 1940, after the provisions of this title; (B) in subsection (e)(1)(A) by inserting or the Investment Advisers Act of 1940 after such provisions of this title; (C) in subsection (e)(2) by inserting or the Investment Advisers Act of 1940 after the purposes of this title; (D) in subsection (g)(1)(B) by inserting, the Investment Advisers Act of 1940 and the
f:\VHLC\102609\102609.423.xml October 26, 2009 (7:24 p.m.)
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3 1 2 3 4 5 6 7 8 9 10 11 12 rules and regulations thereunder, after with such provisions; (E) in subsection (g)(2) by inserting , the Investment Advisers Act of 1940, after any specified provision of this title; (F) in subsection (h)(1)(B) by inserting , any provision of the Investment Advisers Act of 1940 or any rule or regulation thereunder, after with any such provision; and (G) in subsection (h)(2) by inserting or the Investment Advisers Act of 1940 after the purposes of this title..
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Amendment to the Discussion Draft of October 1, 2009 [Investor Protection Act of 2009]
Offered by Ms. Bean of Illinois
Page 64, after line 21, insert the following new sub-paragraph (and redesignate subsequent subparagraphs accordingly):
(D) the use of technology to analyze information collected pursuant to Section 217 of this Act to identify potential irregularities or anomalies that could be indicators of potential fraud.
F:\BJY\111FS\IPA\DRIEHAUS_001.XML
AMENDMENT OFFERED
TO
H.R.
BY
MR. DRIEHAUS
[amendment to IPA discussion draft of October 1, 2009
At the end of the bill insert the following: 1 2 3 4 5 6
TITLE VIIREGISTRATION OF MUNICIPAL FINANCIAL ADVISORS

SEC. 701. MUNICIPAL FINANCIAL ADVISER REGISTRATION REQUIREMENT.
(a) IN GENERAL.The Securities Exchange Act of
7 1934 is amended by inserting after section 15E (15 8 U.S.C. 78o7) the following new section: 9 10 11
SEC. 15F. MUNICIPAL FINANCIAL ADVISER REGISTRATION REQUIREMENT.
(a)(1)(A) IN GENERAL.It shall be unlawful for
12 any person to make use of the mails or any means or in13 strumentality of interstate commerce to act as a municipal 14 financial adviser unless such person is registered as a mu15 nicipal financial adviser in accordance with subsection (b). 16 (B) EXCEPTION
FOR
EMPLOYEES.Subparagraph
17 (A) shall not apply to a natural person associated with 18 a municipal financial adviser, as long as such adviser is
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2 1 registered in accordance with subsection (b) and is not a 2 natural person. 3 (2) The Commission, by rule or order, as it deems
4 consistent with the public interest and the protection of 5 investors, may conditionally or unconditionally exempt 6 from paragraph (1) of this section any municipal financial 7 adviser or class of municipal financial advisers specified 8 in such rule or order. 9 (b)(1) A municipal financial adviser may be reg-
10 istered by filing with the Commission an application for 11 registration in such form and containing such information 12 and documents concerning such municipal financial ad13 viser and any persons associated with such municipal fi14 nancial adviser as the Commission, by rule, may prescribe 15 as necessary or appropriate in the public interest or for 16 the protection of investors. Within 45 days of the date of 17 the filing of such application (or within such longer period 18 as to which the applicant consents), the Commission 19 shall 20 21 22 23 24 25 (A) by order grant registration, or (B) institute proceedings to determine whether registration should be denied. Such proceedings shall include notice of the grounds for denial under consideration and opportunity for hearing and shall be concluded within 120 days of the date of the filing
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3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 of the application for registration. At the conclusion of such proceedings, the Commission, by order, shall grant or deny such registration. The Commission may extend the time for conclusion of such proceedings for up to 90 days if it finds good cause for such extension and publishes its reasons for so finding or for such longer period as to which the applicant consents. The Commission shall grant such registration if the Commission finds that the requirements of this section are satisfied. The Commission shall deny such registration if it does not make such a finding or if it finds that if the applicant were so registered, its registration would be subject to suspension or revocation under paragraph (4). (2) An application for registration of a municipal
17 financial adviser to be formed or organized may be made 18 by a municipal financial adviser to which the municipal 19 financial adviser to be formed or organized is to be the 20 successor. Such application, in such form as the Commis21 sion, by rule, may prescribe, shall contain such informa22 tion and documents concerning the applicant, the suc23 cessor, and any persons associated with the applicant or 24 the successor, as the Commission, by rule, may prescribe 25 as necessary or appropriate in the public interest or for
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4 1 the protection of investors. The grant or denial of registra2 tion to such an applicant shall be in accordance with the 3 procedures set forth in paragraph (1) of this subsection. 4 If the Commission grants such registration, the registra5 tion shall terminate on the 45th day after the effective 6 date thereof, unless prior thereto the successor shall, in 7 accordance with such rules and regulations as the Com8 mission may prescribe, adopt the application for registra9 tion as its own. 10 (3) Any provision of this title (other than section
11 5 and subsection (a) of this section) which prohibits any 12 act, practice, or course of business if the mails or any 13 means or instrumentality of interstate commerce is used 14 in connection therewith shall also prohibit any such act, 15 practice, or course of business by any registered municipal 16 financial adviser or any person acting on behalf of such 17 a municipal financial adviser, irrespective of any use of 18 the mails or any means or instrumentality of interstate 19 commerce in connection therewith. 20 (4) The Commission, by order, shall censure, place
21 limitations on the activities, functions, or operations of, 22 suspend for a period not exceeding 12 months, or revoke 23 the registration of any municipal financial adviser if it 24 finds, on the record after notice and opportunity for hear25 ing, that such censure, placing of limitations, suspension,
(452308|4)
5 1 or revocation is in the public interest and that such munic2 ipal financial adviser, whether prior or subsequent to be3 coming such, or any person associated with such municipal 4 financial adviser, whether prior or subsequent to becoming 5 so associated 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (A) has willfully made or caused to be made in any application for registration or report required to be filed with the Commission or with any other appropriate regulatory agency under this title, or in any proceeding before the Commission with respect to registration, 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, or has omitted to state in any such application or report any material fact which is required to be stated therein; (B) has been convicted within 10 years preceding the filing of any application for registration or at any time thereafter of any felony or misdemeanor or of a substantially equivalent crime by a foreign court of competent jurisdiction which the Commission finds (i) involves the purchase or sale of any security, the taking of a false oath, the making of a false report, bribery, perjury, burglary, any
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6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 substantially equivalent activity however denominated by the laws of the relevant foreign government, or conspiracy to commit any such offense; (ii) arises out of the conduct of the business of a municipal financial adviser, broker, dealer, municipal securities dealer, government securities broker, government securities dealer, investment adviser, bank, insurance company, fiduciary, transfer agent, nationally recognized statistical rating organization, foreign person performing a function substantially equivalent to any of the above, or entity or person required to be registered under the Commodity Exchange Act (7 U.S.C. 1 et seq.) or any substantially equivalent foreign statute or regulation; (iii) involves the larceny, theft, robbery, extortion, forgery, counterfeiting, fraudulent concealment, embezzlement, fraudulent conversion, or misappropriation of funds, or securities, or substantially equivalent activity however denominated by the laws of the relevant foreign government; or (iv) involves the violation of section 152, 1341, 1342, or 1343 or chapter 25 or 47 of
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7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 title 18, or a violation of a substantially equivalent foreign statute; (C) is permanently or temporarily enjoined by order, judgment, or decree of any court of competent jurisdiction from acting as a municipal financial adviser, investment adviser, underwriter, broker, dealer, municipal securities dealer, government securities broker, government securities dealer, transfer agent, nationally recognized statistical rating organization, foreign person performing a function substantially equivalent to any of the above, or entity or person required to be registered under the Commodity Exchange Act or any substantially equivalent foreign statute or regulation, or as an affiliated person or employee of any investment company, bank, insurance company, foreign entity substantially equivalent to any of the above, or entity or person required to be registered under the Commodity Exchange Act or any substantially equivalent foreign statute or regulation or from engaging in or continuing any conduct or practice in connection with any such activity, or in connection with the purchase or sale of any security; (D) has willfully violated any provision of the Securities Act of 1933, the Investment Advisers Act
(452308|4)
8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of 1940, the Investment Company Act of 1940, the Commodity Exchange Act, this title, the rules or regulations under any of such statutes, or is unable to comply with any such provision; (E) has willfully aided, abetted, counseled, commanded, induced, or procured the violation by any other person of any provision of the Securities Act of 1933, the Investment Advisers Act of 1940, the Investment Company Act of 1940, the Commodity Exchange Act, this title, the rules or regulations under any of such statutes, or has failed reasonably to supervise, with a view to preventing violations of the provisions of such statutes, rules, and regulations, another person who commits such a violation, if such other person is subject to his supervision. For the purposes of this subparagraph, no person shall be deemed to have failed reasonably to supervise any other person, if (i) there have been established procedures, and a system for applying such procedures, which would reasonably be expected to prevent and detect, insofar as practicable, any such violation by such other person, and (ii) such person has reasonably discharged the duties and obligations incumbent
(452308|4)
9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 upon him by reason of such procedures and system without reasonable cause to believe that such procedures and system were not being complied with; (F) is subject to any order of the Commission barring or suspending the right of the person to be associated with a municipal financial adviser; (G) has been found by a foreign financial regulatory authority to have (i) made or caused to be made in any application for registration or report required to be filed with a foreign financial regulatory authority, or in any proceeding before a foreign financial regulatory authority with respect to registration, any statement that 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, or has omitted to state in any application or report to the foreign financial regulatory authority any material fact that is required to be stated therein; (ii) violated any foreign statute or regulation regarding transactions in securities, or contracts of sale of a commodity for future deliv-
(452308|4)
10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ery, traded on or subject to the rules of a contract market or any board of trade; (iii) aided, abetted, counseled, com-
manded, induced, or procured the violation by any person of any provision of any statutory provisions enacted by a foreign government, or rules or regulations thereunder, empowering a foreign financial regulatory authority regarding transactions in securities, or contracts of sale of a commodity for future delivery, traded on or subject to the rules of a contract market or any board of trade, or has been found, by a foreign financial regulatory authority, to have failed reasonably to supervise, with a view to preventing violations of such statutory provisions, rules, and regulations, another person who commits such a violation, if such other person is subject to his supervision; or (H) is subject to any final order of a State securities commission (or any agency or officer performing like functions), State authority that supervises or examines banks, savings associations, or credit unions, State insurance commission (or any agency or office performing like functions), an appropriate Federal banking agency (as defined in sec-
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11 1 2 3 4 5 6 7 8 9 10 11 12 13 tion 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(q))), or the National Credit Union Administration, that (i) bars such person from association with an entity regulated by such commission, authority, agency, or officer, or from engaging in the business of securities, insurance, banking, savings association activities, or credit union activities; or (ii) constitutes a final order based on violations of any laws or regulations that prohibit fraudulent, manipulative, or deceptive conduct. (5) Pending final determination whether any reg-
14 istration under this subsection shall be revoked, the Com15 mission, by order, may suspend such registration, if such 16 suspension appears to the Commission, after notice and 17 opportunity for hearing, to be necessary or appropriate in 18 the public interest or for the protection of investors. Any 19 registered municipal financial adviser may, upon such 20 terms and conditions as the Commission deems necessary 21 or appropriate in the public interest or for the protection 22 of investors, withdraw from registration by filing a written 23 notice of withdrawal with the Commission. If the Commis24 sion finds that any registered municipal financial adviser 25 is no longer in existence or has ceased to do business as
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12 1 a municipal financial adviser, the Commission, by order, 2 shall cancel the registration of such municipal financial 3 adviser. 4 (6)(A) With respect to any person who is associated,
5 who is seeking to become associated, or, at the time of 6 the alleged misconduct, who was associated or was seeking 7 to become associated with a municipal financial adviser, 8 the Commission, by order, shall censure, place limitations 9 on the activities or functions of such person, or suspend 10 for a period not exceeding 12 months, or bar such person 11 from being associated with a municipal financial adviser, 12 if the Commission finds, on the record after notice and 13 opportunity for a hearing, that such censure, placing of 14 limitations, suspension, or bar is in the public interest and 15 that such person 16 17 18 19 20 21 22 23 (i) 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 this subsection; (ii) 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 paragraph; or
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13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 (iii) is enjoined from any action, conduct, or practice specified in subparagraph (C) of such paragraph (4). (B) It shall be unlawful (i) for any person as to whom an order under subparagraph (A) is in effect, without the consent of the Commission, willfully to become, or to be, associated with a municipal financial adviser in contravention of such order; or (ii) for any municipal financial adviser to permit such a person, without the consent of the Commission, to become or remain, a person associated with the municipal financial adviser in contravention of such order, if such municipal financial adviser knew, or in the exercise of reasonable care should have known, of such order. (7) No registered municipal financial adviser shall
18 act as such unless it meets such standards of operational 19 capability and such municipal financial adviser and all 20 natural persons associated with such municipal financial 21 adviser meet such standards of training, experience, com22 petence, and such other qualifications as the Commission 23 finds necessary or appropriate in the public interest or for 24 the protection of investors. The Commission shall establish 25 such standards by rules and regulations, which may
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14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 (A) specify that all or any portion of such standards shall be applicable to any class of municipal financial advisers and persons associated with municipal financial advisers; (B) require persons in any such class to pass tests prescribed in accordance with such rules and regulations, which tests shall, with respect to any class of partners, officers, or supervisory employees (which latter term may be defined by the Commissions rules and regulations) engaged in the management of the municipal financial adviser, include questions relating to bookkeeping, accounting, supervision of employees, maintenance of records, and other appropriate matters; and (C) provide that persons in any such class other than municipal financial advisers and partners, officers, and supervisory employees of municipal financial advisers, may be qualified solely on the basis of compliance with such standards of training and such other qualifications as the Commission finds appropriate.
22 The Commission, by rule, may prescribe reasonable fees 23 and charges to defray its costs in carrying out this para24 graph, including, but not limited to, fees for any test ad25 ministered by it or under its direction.
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15 1 (c)(1)(A) No municipal financial adviser shall make
2 use of the mails or any means or instrumentality of inter3 state commerce in connection with which such municipal 4 financial adviser engages in any fraudulent, deceptive, or 5 manipulative act or practice or violates such rules and reg6 ulations regarding conflicts of interest or fair practices, 7 including but not limited to rules and regulations related 8 to political contributions, as the Commission shall pre9 scribe in the public interest or for the protection of inves10 tors or to maintain fair and orderly markets. 11 (B) The Commission shall, for the purposes of this
12 paragraph as the Commission finds necessary or appro13 priate in the public interest or for the protection of inves14 tors, by rules and regulations define, and prescribe means 15 reasonably designed to prevent, such acts and practices 16 as are fraudulent, deceptive, or manipulative. 17 (2) If the Commission finds, after notice and oppor-
18 tunity for a hearing, that any person subject to the provi19 sions of this section or any rule or regulation thereunder 20 has failed to comply with any such provision, rule, or regu21 lation in any material respect, the Commission may pub22 lish its findings and issue an order requiring such person, 23 and any person who was a cause of the failure to comply 24 due to an act or omission the person knew or should have 25 known would contribute to the failure to comply, to com-
(452308|4)
16 1 ply, or to take steps to effect compliance, with such provi2 sion or such rule or regulation thereunder upon such 3 terms and conditions and within such time as the Commis4 sion may specify in such order. 5 (d) Every registered municipal financial adviser
6 shall establish, maintain, and enforce written policies and 7 procedures reasonably designed, taking into consideration 8 the nature of such municipal financial advisers business, 9 to prevent the misuse in violation of this title, or the rules 10 or regulations thereunder, of material, nonpublic informa11 tion by such municipal financial adviser or any person as12 sociated with such municipal financial adviser. The Com13 mission, as it deems necessary or appropriate in the public 14 interest or for the protection of investors, shall adopt rules 15 or regulations to require specific policies or procedures 16 reasonably designed to prevent misuse in violation of this 17 title (or the rules or regulations thereunder) of material, 18 nonpublic information. 19 (e) A municipal financial adviser and any person as-
20 sociated with such municipal financial adviser shall be 21 deemed to have a fiduciary duty to any municipal securi22 ties issuer for whom such municipal financial adviser acts 23 as a municipal financial adviser. A municipal financial ad24 viser may not engage in any act, practice, or course of 25 business which is not consistent with a municipal financial
(452308|4)
17 1 advisers fiduciary duty. The Commission shall, for the 2 purposes of this paragraph, by rules and regulations de3 fine, and prescribe means reasonably designed to prevent, 4 such acts, practices, and courses of business as are not 5 consistent with a municipal financial advisers fiduciary 6 duty to its clients.. 7 (b) DEFINITION.Section 3(a) of the Securities Ex-
8 change Act of 1934 (15 U.S.C. 78c(a)) is amended by 9 adding at the end the following new paragraphs: 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (65) MUNICIPAL
FINANCIAL ADVISER.
(A) The term municipal financial adviser means a person who, for compensation, engages in the business of (i) providing advice to a municipal securities issuer with respect to (I) the issuance or proposed issuance of securities, including any remarketing of municipal securities directly or indirectly by or on behalf of a municipal securities issuer; (II) the investment of proceeds from securities issued by such municipal securities issuer; (III) the hedging of any risks associated with subclauses (I) or (II),
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18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 including advice as to swap agreements (as defined in section 206A of the Gramm-Leach-Bliley Act regardless of whether the counterparties constitute eligible contract participants); or (IV) preparation of disclosure documents in connection with the issuance, proposed issuance, or previous issuance of securities issued by a municipal securities issuer, including, without limitation, official statements and documents prepared in connection with a written agreement or contract for the benefit of holders of such securities described in section 240.15c212 of title 17, Code of Federal Regulations; or (ii) assisting a municipal securities issuer in selecting or negotiating guaranteed investment contracts or other investment products; or (iii) assisting any municipal securities issuer in the primary offering of securities not involving a public offering.
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19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (B) Such term does not include (i) an attorney, if the attorney is offering advice or providing services that are of a traditional legal nature; (ii) a nationally recognized statistical rating organization to the extent it is involved in the process of developing credit ratings; (iii) a registered broker-dealer when acting as an underwriter, as such term is defined in section 2(a)(11) of the Securities Act of 1933 (15 U.S.C. section 77b(a)(11)); or (iv) a State or any political subdivision thereof. (66) MUNICIPAL
SECURITIES ISSUER.The
term municipal securities issuer means (A) any entity that has the ability to issue a security the interest on which is excludable from gross income under section 103 of the Internal Revenue Code of 1986 and the regulations thereunder; or (B) any person who receives the proceeds generated from the issuance of municipal securities.
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20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 (67) PERSON
ASSOCIATED WITH A MUNICIPAL
FINANCIAL ADVISER; ASSOCIATED PERSON OF A MUNICIPAL FINANCIAL ADVISER.The
term person as-
sociated with a municipal financial adviser or associated person of a municipal financial adviser means any partner, officer, director, or branch manager of such municipal financial adviser (or any person occupying a similar status or performing similar functions), any person directly or indirectly controlling, controlled by, or under common control with such municipal financial adviser, or any employee of such municipal financial adviser, except that any person associated with a municipal financial adviser whose functions are solely clerical or ministerial shall not be included in the meaning of such term for purposes of section 15F(b) (other than paragraph (6) thereof)..
SEC. 702. CONFORMING AMENDMENTS.
(a) SECURITIES EXCHANGE ACT
OF
1934 .The Se-
20 curities Exchange Act of 1934 is amended 21 22 23 24 (1) in section 15(b)(4)(B)(ii) (15 U.S.C. 78o(b)(4)(B)(ii)), by inserting municipal finance adviser, after nationally recognized statistical rating organization,;
(452308|4)
21 1 2 3 4 5 6 7 8 9 (2) in section 15(b)(4)(C) (15 U.S.C.
78o(b)(4)(C)), by inserting municipal finance adviser, after nationally recognized statistical rating organization,; and (3) in section 17(a)(1) (15 U.S.C. 78q(a)(1)), by inserting registered municipal financial adviser, after nationally recognized statistical rating organization,. (b) INVESTMENT COMPANY ACT
OF
1940.The In-
10 vestment Company Act of 1940 is amended 11 12 13 14 15 16 17 18 19 20 21 22 (1) in section 2(a) (15 U.S.C. 80a2(a)), by inserting the following new paragraph: (54) The term municipal finance adviser has the same meaning as in section 3 of the Securities Exchange Act of 1934.; (2) in section 9(a)(1) (15 U.S.C. 80a9(a)(1), by inserting municipal finance adviser, after credit rating agency,; and (3) in section 9(a)(2) (15 U.S.C. 80a9(a)(2), by inserting municipal finance adviser, after credit rating agency,. (c) INVESTMENT ADVISERS ACT
OF
1940.The In-
23 vestment Advisers Act of 1940 is amended 24 25 (1) in section 202(a) (15 U.S.C. 80b2(a)), by inserting the following new paragraph:
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22 1 2 3 4 5 6 7 8 9 10 11 (29) The term municipal finance adviser has the same meaning as in Section 3 of the Securities Exchange Act of 1934.; (2) in section 203(e)(2)(B) (15 U.S.C. 80b 3(e)(2)(B)), by inserting municipal finance adviser, after credit rating agency,; and (3) in section 203(e)(4) (15 U.S.C. 80b 3(e)(4)) is amended by inserting municipal finance adviser, after credit rating agency,.
SEC. 703. EFFECTIVE DATES.
(a) IN GENERAL.The amendments made by this
12 title shall take effect 30 days after the date of the enact13 ment of this Act. 14 (b) EFFECTIVE DATE
AND
REQUIREMENTS
FOR
15 REGULATIONS.Notwithstanding subsection (a), the Se16 curities and Exchange Commission shall, within 120 days 17 after the date of the enactment of this Act, publish for 18 notice and public comment such regulations as are initially 19 required to implement this title, and shall take final action 20 with respect to such regulations not later than 270 days 21 after the date of enactment of this Act. 22 (c) REGISTRATION DATE.No person may continue
23 to act as a municipal financial adviser, as such term is 24 defined in section 3(a)(65) of the Securities Exchange Act 25 of 1934 (as added by this title), after 30 days after the
(452308|4)
23 1 date the regulations described in subsection (b) become 2 effective unless such person has been registered as re3 quired by the amendment made by section 701 of this 4 title. Amend the table of contents in section 2 by adding at the end the following:
TITLE VIIREGISTRATION OF MUNICIPAL FINANCIAL ADVISORS Sec. 701. Municipal financial adviser registration requirement. Sec. 702. Conforming amendments. Sec. 703. Effective dates.
(452308|4)
Hensarling_101B
2ND DEGREE AMENDMENT TO FRANK AMENDMENT #001 TO DISCUSSION DRAFT OF OCTOBER 1, 2009 OFFERED BY MR. HENSARLING OF TEXAS Page 2, line 6 after "1940." insert the following:
1 2 3 4 5 6
While brokers and dealers will be subject to the same standard of conduct as investment advisers when providing investment advice, the duty, if consistent with the terms and scope of the relationship, shall apply only during the advice interaction and shall not extend further in time, product, scope or services beyond that interaction.
F:\MWB\111FS\IPA\IPA_MAFFEI_002.XML
AMENDMENT
CUSSION TOR
TO THE
AMENDMENT
TO THE
DIS-
DRAFT
OF
OCTOBER 1, 2009 [INVESOF
PROTECTION ACT
BY
2009]
OF
OFFERED
MR. MAFFEI
NEW YORK
Page 2 of the amendment, line 17, insert after the period the following: 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)..
(453586|2)
F:\BJY\111FS\IPA\JENKINS_001.XML
AMENDMENT OFFERED
BY
TO
H.R.
At the end of title VI insert the following: 1 2

SEC. 606. CREATION OF OMBUDSMAN FOR THE PCAOB.
Title I of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
3 7211 et seq.) is amended by adding at the end the fol4 lowing new section: 5 6
SEC. 110. OMBUDSMAN.
(a) ESTABLISHMENT REQUIRED.Not later than
7 180 days after the date of enactment of the Investor Pro8 tection Act, the Board shall appoint an ombudsman for 9 the Board. The Ombudsman shall report directly to the 10 Chairman. 11 (b) DUTIES
OF
OMBUDSMAN. The ombudsman
12 appointed in accordance with subsection (a) for the Board 13 shall 14 15 16 17 18 (1) act as a liaison between the Board and (A) any registered public accounting firm or issuer with respect to issues or disputes concerning the preparation or issuance of any audit report with respect to that issuer; and
(453431|1)
F:\BJY\111FS\IPA\JENKINS_001.XML
2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 (B) any affected registered public accounting firm or issuer with respect to (i) any problem such firm or issuer may have in dealing with the Board resulting from the regulatory activities of the Board, particularly with regard to the implementation of section 404; and (ii) issues caused by the relationships of registered public accounting firms and issuers generally; and (2) assure that safeguards exist to encourage complainants to come forward and to preserve confidentiality; and (3) carry out such activities, and any other activities assigned by the Board, in accordance with guidelines prescribed by the Board..
(453431|1)
AMENDMENT
TOBER OF
TO THE
DISCUSSION DRAFT
OF
OC -
1, 2009 [INVESTOR PROTECTION ACT
2009] OFFERED
BY
Page 86, after line 16, insert the following new section: 1 2 3 4
SEC. 414. STUDY ON INTERNAL CONTROL EVALUATION AND REPORTING COST BURDENS ON SMALLER ISSUERS.
(a) STUDY REQUIRED.The Government Account-
5 ability Office and the Securities and Exchange Commis6 sion shall each conduct a study evaluating the costs and 7 benefits of complying with section 404(b) of the Sarbanes8 Oxley Act of 2002 (15 U.S.C. 7262(b)) on issuers who 9 are not accelerated or large accelerated filers as defined 10 by Commission Rule 12b-2. The study shall 11 12 13 14 15 16 17 (1) include recommendations, administrative reforms, and legislative proposals on implementation steps that could be taken to reduce compliance burdens on these issuers; and (2) determine the efficacy of the Securities and Exchange Commissions measures to limit the cost of compliance on smaller issuers.
(453525|2)
2 1 (b) REPORTS REQUIRED.On or before June 1,
2 2010, the Government Accountability Office and the Secu3 rities and Exchange Commission shall submit separate re4 ports to Congress containing the findings and conclusions 5 of the studies required under subsection (a), together with 6 such recommendations for regulatory, legislative, or ad7 ministrative action as may be appropriate. 8 (c) EFFECTIVE DATE CONTINGENT
ON
REPORTS.
9 Requirements under section 404(b) of the Sarbanes-Oxley 10 Act of 2002 on issuers described under subsection (a) shall 11 not become effective until the results of the report are de12 livered, but in no case before June 1, 2011.
(453525|2)
VOTES IN FINANCIAL SERVICES COMMITTEE NOW EXPECTED NEXT V T LS I E NO E E T WEDNESDAY, INVESTOR PROTECTION ACT OF WEDNESDAY , NOVEMBER 3, 2009 ON I V E E 09 O E T 2009
Davis, Greg to: undisclosed-recipients:; D s g
10/28/2009 06:13 PM
(b)(6)
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10-27-28-09 Full Committee Updated Roster

Davis , Greg to: undisclosed-recipients:;
10/28/2009 11:51 PM
- 10-27-28-09 Markup Roster.pdf
October 28, 2009 6:52 PM

Committee on Financial Services Markup of Pending Legislation October 27-28, 2009
October 1, 2009, Discussion Draft of the Investor Protection Act of 2009 (to be reported as H.R. 3817)--Pending
*Frank/Kanjorski 001 Managers amendment Agreed to, as amended, voice vote Agreed to, voice vote Agreed to, voice vote Roll call requested Roll call requested Offered and withdrawn Offered and withdrawn Not agreed to, voice vote Agreed to, voice vote Offered and withdrawn Agreed to, voice vote Agreed to, voice vote Offered and withdrawn Agreed to, voice vote Offered and withdrawn Not offered Roll call requested
Castle/Speier Perlmutter Adler Waters/Peters Kilroy
001 001 002 003 001
Study on SEC revolving door Study of high-frequency trading Exemption for smaller companies from attestation requirements SEC authority to issue rules on proxy access Additional responsibilities to secure delivery of dividends, interest, and other valuable property rights Higher SIPC payouts with respect to pension plans Authority to contract for collection of delinquent judgments and orders Investment advisory committee membership GAO study of financial planning Clarification regarding liquidation proceedings National securities association enforcement Nationwide service of subpoenas Biannual rather than quarterly reporting Securities clarification Fiduciary duty clarification Independent custodial requirements Clearing services Analysis of rule regarding smaller reporting companies Senior investment protection
Maffei/Ellison Posey Waters Capuano Klein Bachus Campbell Campbell Ellison Ellison Foster Garrett Garrett Hodes
001 001 001 001 001 001 Revised 091 092 001 002 001 063 003B 001
Agreed to, as modified, voice vote Offered and withdrawn Agreed to, voice vote Not offered
Hensarling Hensarling Jenkins/Garrett Kilroy
143 101 001 002
Strike section 502 Second degree amendment to Frank 001 Creation of ombudsman for the PCAOB Disclosure of votes of institutional investment managers
October 28, 2009 6:52 PM
McCarthy (CA) McCarthy (CA)
029 001
Reporting requirements Organization and conduct of the divisions and offices of the Securities and Exchange Commission Ombudsman Streamlining of SEC filing procedures Financial reporting forum Comptroller General study to review securities arbitration system Commission study on disclosure to retail customers before purchase of products or services Congressional access to information
Agreed to, voice vote Offered and withdrawn Agreed to, voice vote Offered and withdrawn Agreed to, voice vote Agreed to, as modified, voice vote Agreed to, voice vote Agreed to, as modified, voice vote Agreed to, voice vote Agreed to, voice vote Agreed to, voice vote Roll call requested Roll call requested Agreed to, voice vote Agreed to, voice vote Agreed to, voice vote Agreed to, voice vote Agreed to, voice vote Roll call requested Offered and withdrawn Offered and withdrawn Roll call requested Agreed to, voice vote
McCarthy (CA) Meeks Miller (CA) Neugebauer
028 025 001 002
Perlmutter
049 Revised
Putnam
001
Royce Royce McCarthy (NY) Maloney/Garrett Neugebauer/Garrett Maffei Bachus Driehaus Frank Capuano/Garrett Price Price Bachmann Bachmann Lee Foster Lee Lee
001 002 002 002 003 002 003 Revised 001 003
Capital Markets Safety Board Administration and enforcement Study on enhancing investment advisor examinations Study on internal control evaluation and reporting cost burdens on smaller issurers SEC budget revised Second degree to Managers amendment Definition of customer Registration of municipal financial advisors Investment advisers subject to state authorities Analysis of rule regarding smaller reporting companies Requirement offset Strike section 201 Presidential appointment of PCAOB members Effective date Grandfathering of existing agreements Custodial requirements
278 279 001 001 001
002 003
Garrett Campbell/Peters
001 001
Prohibition of certain contingency-based attorney fee agreements Prohibition of certain contingency-based attorney fee agreements relating to preexisting agreements Auditing oversight board Clarification of standard of conduct with respect to Commission and fee based compensation
Agreed to, voice vote Agreed to, voice vote
October 28, 2009 6:52 PM
Posey
Second degree to Waters 001
H.R. 3818, Private Fund Investment Advisers Registration Act of 2009, ordered reported to the House, as amended, with a favorable recommendation by a record vote of 67 yeas and 1 nay.
*Kanjorski/Frank *Peters Himes Lucas Kosmas Bachus Capito/Paulsen Garrett Bachmann McCarthy (CA) Garrett Hensarling Hensarling Hensarling 003 202 303 002 Registration level Exemption of hedge fund advisers Exemption of private equity Strike systemic risk 001 001 001 001 001 011 001 003 009 Managers amendment Exemption of and reporting by certain private fund advisers Qualified client standard Commodity trading advisors exemption Transition period and effective date Client definition Small business advisory exemption GAO study Transition rule Agreed to, voice vote Offered and withdrawn Agreed to, voice vote Offered and withdrawn Agreed to, voice vote Agreed to, voice vote Agreed to, voice vote Agreed to, voice vote Agreed to, voice vote Not agreed to, voice vote Not offered Not agreed to, voice vote Not offered Not agreed to, record vote, 24 yeas, 43 nays Agreed to, voice vote
Peters/Meeks/Garrett
001 Revised
Exemption and reporting by certain private fund advisers
H.R. 3890, Accountability and Transparency in Rating Agencies Act, ordered reported to the House, as amended, with a favorable recommendation by a record vote of 49 yeas and 14 nay.
*Speier 001 Elimination of exemption from fair disclosure rule Agreed to, voice vote
October 28, 2009 6:52 PM
Ackerman Kanjorski/Frank Kilroy Kilroy Kilroy Kilroy Foster
001 349 001 004 002 003 001 (offered Enbloc with 002 002 (offered Enbloc with 001 003 001 002 038 037 004 001 002 003 024
Symbols conform to State laws or regulations requirement Managers amendment Publication of rating histories on the Edgar system Effect of Rule 436(G) Alternative methodologies to assess credit risk Independent directors SEC study on meaningful multi digit rating symbols SEC study on ratings standardization
Foster
Offered and withdrawn Agreed to, voice vote Agreed to, voice vote Agreed to, voice vote Agreed to, voice vote Not agreed to, voice vote Agreed to, enbloc, voice vote (See above)
Foster/Lynch Frank/Kanjorski Garrett/Frank/ Bachus Kanjorski/Capuano Kanjorski/Capuano Waters Lynch Speier Speier Meeks
Advisory board Mandatory Removal of statutory references to credit ratings
Compensation of compliance officer Statistical credit rating organization attestation Prohibition on conflicts Exception
McHenry Bachus Hensarling McCarthy (CA) Sherman Sherman Garrett Donnelly Sherman/Lynch Sherman
022 001 144
Disclosures with respect to structured securities Change to designation Study of credit ratings SEC study of market barriers
Agreed to, voice vote Not offered Agreed to, voice vote Not offered Not offered Agreed to, voice vote Agreed to, voice vote Agreed to, voice vote Agreed to, voice vote Agreed to, as modified, voice vote Agreed to, voice vote Agreed to, voice vote Agreed to, voice vote Agreed to, voice vote Offered and withdrawn Not agreed to, voice vote Agreed to, voice vote Offered and withdrawn Offered and withdrawn
001 002 001 001 003 002 Revised
Waiver of First Amendment defense Requirement of contracts for credit ratings
Commission staffing and rulemaking authority Initial credit rating assignments Requirement of contracts for credit ratings
*Indicates amendment filed prior to deadline.
Letter to Chairman Frank on Reg Restructure

Tryon, Tryon , Warren to: Tryon, Warren
History: This message has been forwarded. 10/29/2009 09:09 AM
October 28, 2009
Dear Chairman Frank:
We are compelled to request a delay in the scheduled mark-up of legislation to fundamentally restructure the regulation of our financial system. Specifically, we are asking for more time to study and understand the 253-page draft legislation circulated last night which represents, by any objective measure, the most significant and far reaching legislative proposal considered in the Financial Services Committee in decades.
This one bill would enact major changes in at least nine major areas of financial services regulation. It : (1) creates an oversight council to monitor systemic risks; (2) empowers regulators to keep a secret list of large, interconnected financial institutions and subject them to extra oversight; (3) massively expands the Federal Reserves regulatory purview; (4) abolishes the Office of Thrift Supervision and merges its functions into the Office of the Comptroller of the Currency; (5) overhauls the regulatory treatment of credit card banks, industrial loan companies and others to create a new classification of special purpose holding companies; (6) establishes a new regulatory framework for payment, clearing and settlement systems; (7) mandates credit risk retention in the asset-backed securitization market; (8) devises a complex resolution regime that makes bailouts a permanent part of the regulatory landscape and puts taxpayers first in line to suffer losses for bailing out too-big-to-fail firms; and (9) rewrites Section 13(3) of the Federal Reserve Act, transforming the way that the Federal Reserve responds to unusual and exigent circumstances in the market.
Several of these proposals including those relating to special purpose holding companies and payment, clearing and settlement systems have been the subject of virtually no discussion in our Committee in this Congress. Any one of them would merit a series of hearings and extensive debate if our Committee were proceeding under anything approximating regular order.
Instead, to evaluate 253 pages of complex legislative text, the Committee is holding a one-day, three-panel hearing with 17 witnesses and strict time constraints for certain panelists. Because the draft legislation was released less than 48 hours before the hearing, the witnesses have had little time to digest its contents or consider its implications. We understand that you are in a hurry to comply with the Obama Administrations arbitrary deadline to create the appearance of accomplishment. We are concerned, however, that the desire to get something anything done to satisfy this arbitrary deadline will result in a bad bill.
This Committees haste stands in marked contrast to the view expressed by the very regulators who will be tasked with implementing this far-reaching legislation. As Federal Reserve Vice Chairman Donald Kohn recently said: I hope we build a regulatory structure thats good for a couple of decades, and its worth taking our time to get it right. In a recent speech, after expressing relief that financial regulatory reform was unlikely to be completed this year, FDIC Chairman Sheila Bair pointed out that Congress needs to take a deep breath and think about [what caused this crisis] a little more.
We strongly urge you to give the Members of the Financial Services Committee sufficient time to think carefully about these complicated and difficult issues, and to legislate responsibly. We, and more importantly, the people we represent, deserve a transparent and deliberative process, particularly when the consequences of getting regulatory reform wrong are so profound for the future of our financial system and taxpayers.
Thank you for your consideration.
Sincerely,
House GOP Financial Services Republicans (names listed on the pdf version)
- 10-28-09 letter to frank.pdf
HOUSE COMMITTEE ON FINANCIAL SERVICES : MATERIALS FOR MARKUP ON NOVEMBER 3, 2009

Davis , Greg to: undisclosed-recipients:;
10/29/2009 07:15 PM
BARNEY FRANK, MA, CHAIRMAN
United States House of Representatives
SPENCER BACHUS, AL, RANKING MEMBER

Washington, D.C.20515
October 29, 2009
MARKUP NOTICE
The Committee on Financial Services will meet in open session on Tuesday, November 3, 2009, (and subsequent days if necessary) after the conclusion of consideration of amendments to the Investor Protection Act in room 2128 Rayburn House Office Building to consider the following measures:
(1) Amendment in the nature of a substitute October 16, 2009, to H.R. 2609, Federal Insurance Office Act of 2009; (2) Committee Print (October 29, 2009) of the Financial Stability Improvement Act of 2009; and (3) H.R. 3904, Overdraft Protection Act.
(b)(6)
- Amdt in nature of substitute to HR 2609.pdf 3904.pdf - 11-3-09 FC MU notice.pdf
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- Committee Print_002_xml.pdf - H.R.
sivaD drehpehS yrogerG v p o r
F:\PCC\111FS\H2609FC_002.XML
AMENDMENT
IN THE TO
NATURE
OF A
SUBSTITUTE
H.R. 2609
OF
OFFERED
BY
MR. KANJORSKI
PENNSYLVANIA
Strike all after the enacting clause and insert the following: 1 2
SECTION 1. SHORT TITLE.
This Act may be cited as the Federal Insurance Of-
3 fice Act of 2009. 4 5

SEC. 2. FEDERAL INSURANCE OFFICE ESTABLISHED.
(a) ESTABLISHMENT
OF
OFFICE.Subchapter I of
6 chapter 3 of title 31, United States Code, is amended 7 8 9 10 11 12 13 14 15 (1) by transferring and inserting section 312 after section 313; (2) by redesignating sections 313 and 312 (as so transferred) as sections 312 and 315, respectively; and (3) by inserting after section 312 (as so redesignated) the following new sections:
SEC. 313. FEDERAL INSURANCE OFFICE.
(a) ESTABLISHMENT
OF
OFFICE.There is estab-
16 lished the Federal Insurance Office as an office in the De17 partment of the Treasury.
f:\VHLC\\101609\101609.162.xml October 16, 2009 (4:51 p.m.)
(450430|8)
2 1 (b) LEADERSHIP.The Office shall be headed by a
2 Director, who shall be appointed by the Secretary of the 3 Treasury. The position of such Director shall be a career 4 reserved position in the Senior Executive Service. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (c) FUNCTIONS. (1) AUTHORITY
SECRETARY.The PURSUANT TO DIRECTION OF
Office shall have the authority,
pursuant to the direction of the Secretary, as follows: (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 recommend to the Board of Governors of the Federal Reserve System or to any other entity identified under law as having systemic risk responsibility, that it designate an insurer, including its affiliates, as an entity subject to heightened regulation. (C) To assist the Secretary in administering the Terrorism Insurance Program established in the Department of the Treasury under the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note).
(450430|8)
3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 (D) To coordinate Federal efforts and develop Federal policy on prudential aspects of international insurance matters, including representation as appropriate in the International Association of Insurance Supervisors and assisting the Secretary in negotiating international insurance agreements on prudential measures. (E) To determine, in accordance with subsection (f), whether State insurance measures are preempted by international insurance agreements on prudential measures. (F) To consult with the States regarding insurance matters of national importance and prudential insurance matters of international importance. (G) To perform such other related duties and authorities as may be assigned to it by the Secretary. (2) ADVISORY
FUNCTIONS.The
Office shall
advise the Secretary on major domestic and prudential international insurance policy issues. (d) SCOPE.The authority of the Office shall ex-
23 tend to all lines of insurance except health insurance, as 24 determined by the Secretary based on section 2791 of the 25 Public Health Service Act (42 U.S.C. 300gg-91).
(450430|8)
4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (e) GATHERING OF INFORMATION. (1) GENERAL.In carrying out its functions under subsection (c), the Office may receive and collect data and information on and from the insurance industry and insurers, enter into information-sharing agreements, analyze and disseminate data and information, and issue reports regarding all lines of insurance except health insurance. (2) COLLECTION
OF INFORMATION FROM IN-
SURERS AND AFFILIATES.Except
as provided in
paragraph (3), the Office may require an insurer, or affiliate of an insurer, to submit such data or information that the Office may reasonably require in carrying out its functions under subsection (c). (3) EXCEPTION
FOR SMALL INSURERS.Para-
graph (2) shall not apply with respect to any insurer or affiliate thereof that meets a minimum size threshold that may be established by the Office by order or rule. Such threshold shall be appropriate to the particular request and need for the data or information. (4) ADVANCE
COORDINATION.Before
col-
lecting any data or information under paragraph (2) from an insurer, or affiliate of an insurer, the Office shall coordinate with each relevant State insurance
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5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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, or may be obtained in a timely manner by, such State insurance regulator, individually or collectively, other regulatory agency, or publicly available sources. Notwithstanding any other provision of law, each such relevant State insurance regulator or other Federal or State regulatory agency is authorized to provide to the Office such data or information. (5) CONFIDENTIALITY. (A) The submission of any non-publicly 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) 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 non-publicly available data or information
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6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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) Any data or information obtained by the Office may be made available to State insurance regulators individually or collectively through an information sharing agreement that shall comply with applicable Federal law and that 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) Section 552 of title 5, United States Code, shall apply to any data or information submitted by an insurer or affiliate of an insurer. (f) PREEMPTION
URES. OF
STATE INSURANCE MEAS-
(1) STANDARD.A State insurance measure shall be preempted if, and only to the extent that the
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7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Director determines, in accordance with this subsection, that the measure (A) directly or indirectly treats a nonUnited States insurer domiciled in a foreign jurisdiction that is subject to an international insurance agreement on prudential measures less favorably than it treats a United States insurer domiciled, licensed, admitted, or otherwise authorized in that State; and (B) is inconsistent with an international insurance agreement on prudential measures that is entered into on a date after the date of the enactment of this Act. (2) DETERMINATION. (A) NOTICE
ENCY.Before OF POTENTIAL INCONSIST-
making any determination of in-
consistency, the Director shall (i) 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 international insurance agreement on prudential measures;
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8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 on (I) the protection of policyholders and policy claimants; (II) the maintenance of the safety, soundness, integrity, and financial responsibility of any entity involved in the business of insurance or insurance operations; (III) ensuring the integrity and stability of the United States financial system; (IV) the need to establish a supervisory or regulatory authority of the Office over any entity involved in the business of insurance or insurance operations in the United States; and (V) the creation of a gap or void in financial or market conduct regulation of any entity involved in the business of insurance or insurance operations in the United States; and (ii) provide interested parties a reasonable opportunity to submit written comments to the Office; (iii) consider the effect of preemption
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9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (iv) consider any comments received. (B) SCOPE

OF REVIEW.For
purposes of
this section, the Directors determination of State insurance measures shall be limited to the subject matter of the prudential measures applicable to the business of insurance contained within the international insurance agreement on prudential measures involved. (C) NOTICE
OF DETERMINATION OF IN-
CONSISTENCY.Upon
making any determina-
tion of inconsistency, 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 shorter than 90 days, before the determination shall become effective; and (iii) notify the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate of the inconsistency. (3) NOTICE
OF EFFECTIVENESS.Upon
the
conclusion of the period referred to in paragraph
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10 1 2 3 4 5 6 7 8 9 10 11 12 (2)(B)(ii), if the basis for the determination of inconsistency still exists, the determination shall become effective and the Director shall (A) cause to be published 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 it has been preempted under this subsection. (g) APPLICABILITY
DURE OF
ADMINISTRATIVE PROCE-
ACT.Determinations of inconsistency pursuant to
13 subsection (f)(2) shall be subject to the applicable provi14 sions of subchapter II of chapter 5 of title 5, United 15 States Code (relating to administrative procedure), and 16 chapter 7 of such title (relating to judicial review). 17 (h) REGULATIONS, POLICIES,
AND
PROCEDURES.
18 The Secretary may issue orders, regulations, policies and 19 procedures to implement this section. 20 (i) CONSULTATION.The Director shall consult
21 with State insurance regulators, individually and collec22 tively, to the extent the Director determines appropriate, 23 in carrying out the functions of the Office. 24 (j) SAVINGS PROVISIONS.Nothing in this section
25 shall
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11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 (1) preempt any State insurance measure that governs any insurers rates, premiums, underwriting or sales practices, or State coverage requirements for insurance, or to the application of the antitrust laws of any State to the business of insurance; (2) be construed to alter, amend, or limit the responsibility of any department or agency of the Federal Government to issue regulations under the Truth in Lending Act (15 U.S.C. 1601 et seq.) or any other Federal law regulating the provision of consumer financial products or services; or (3) affect the preemption of any State insurance measure otherwise inconsistent with and preempted by Federal law. (k) RETENTION
OF
EXISTING STATE REGULATORY
16 AUTHORITY.Nothing in this section shall be construed 17 to establish a general supervisory or regulatory authority 18 of the Office or the Department of the Treasury over the 19 business of insurance. 20 (l) ANNUAL REPORT
TO
CONGRESS.Beginning
21 September 30, 2011, the Director shall submit a report 22 on or before September 30 of each calendar year to the 23 President and to the Committee on Financial Services of 24 the House of Representatives and the Committee on 25 Banking, Housing, and Urban Affairs of the Senate on
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12 1 the insurance industry, any actions taken by the office 2 pursuant to subsection (f) (regarding preemption of incon3 sistent State insurance measures), and any other informa4 tion as deemed relevant by the Director or as requested 5 by such Committees. 6 (m) USE
OF
EXISTING RESOURCES.To carry out
7 this section, the Office may employ personnel, facilities, 8 and other Department of the Treasury resources available 9 to the Secretary. 10 (n) DEFINITIONS.For purposes of this section and
11 section 314, the following definitions shall apply: 12 13 14 15 16 17 18 19 20 21 22 23 24 25

ON
(1) AFFILIATE.The term affiliate means, with respect to an insurer, any person that controls, is controlled by, or is under common control with the insurer. (2) DETERMINATION
OF INCONSISTENCY.
The term determination of inconsistency means a determination that a State insurance measure is preempted under subsection (f). (3) INSURER.The term insurer means any person engaged in the business of insurance, including reinsurance. (4) INTERNATIONAL
PRUDENTIAL INSURANCE AGREEMENT
MEASURES.The
term inter-
national insurance agreement on prudential meas-
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13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ures means a written bilateral or multilateral agreement entered into between the United States and a foreign government, authority, or regulatory entity regarding prudential measures applicable to the business of insurance or reinsurance. (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) SECRETARY.The term Secretary means the Secretary of the Treasury. (8) 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. (9) 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.
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14 1 2 3 4 5 6 7 8 9 10 11 (10) STATE
INSURANCE REGULATOR.The
term State insurance regulator means any State regulatory authority responsible for the supervision of insurers. (11) UNITED
STATES INSURER.The
term
United States insurer means (A) an insurer that is organized under the laws of a State; or (B) a United States branch of a nonUnited States insurer. (o) AUTHORIZATION
OF
APPROPRIATIONS.There
12 are authorized to be appropriated for the Office such sums 13 as may be necessary for each fiscal year. 14 15 16
SEC. 314. INTERNATIONAL INSURANCE AGREEMENTS ON PRUDENTIAL MEASURES.
The Secretary is authorized to negotiate and enter
17 into international insurance agreements on prudential 18 measures on behalf of the United States.. 19 (b) DUTIES
OF
SECRETARY.Section 321(a) of title
20 31, United States Code, is amended 21 22 23 24 end; (2) in paragraph (8)(C), by striking the period at the end and inserting ; and; and (1) in paragraph (7), by striking and at the
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15 1 2 3 4 5 6 7 (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
8 for subchapter I of chapter 3 of title 31, United States 9 Code, is amended by striking the item relating to section 10 312 and inserting the following new items:
Sec. Sec. Sec. Sec. 312. 313. 314. 315. Terrorism and Financial Intelligence. Federal Insurance Office. International Insurance Agreements on Prudential Measures. Continuing in office..
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F:\JMW\FS111\FINSTAB\MARK_002.XML
[COMMITTEE PRINT]
OCTOBER 29, 2009
1 2 3 4 5
TITLE IFINANCIAL STABILITY IMPROVEMENT

SEC. 1000. SHORT TITLE; DEFINITIONS; TABLE OF CONTENTS.
(a) SHORT TITLE.This title may be cited as the
6 Financial Stability Improvement Act of 2009. 7 (b) DEFINITIONS.For purposes of this Act, the fol-
8 lowing definitions shall apply: 9 10 11 12 13 14 15 16 17 18 19 20 21 22

(1) The term Board means the Board of Governors of the Federal Reserve System. (2) The term Council means the Financial Services Oversight Council established under section 1001 of this Act. (3) The term Federal financial regulatory agency means any agency that has a voting member of the Council as set forth in section 1001(b)(1). (4) The term financial company means a company or other entity (A) that is (i) incorporated or organized under the laws of the United States or any State, territory, or possession of the United
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2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 States, the District of Columbia, Commonwealth of Puerto Rico, Commonwealth of Northern Mariana Islands, Guam, American Samoa, or the United States Virgin Islands; (ii) a Federal or State branch or agency of a foreign bank as such terms are defined in the International Banking Act of 1978 (12 U.S.C. 3101(b)); or (iii) a United States affiliate or other United States operating entity of a company that is incorporated or organized in a country other than the United States; and (B) that is, in whole or in part, directly or indirectly, engaged in financial activities. (5) The term identified financial holding company means a financial company that the Council has identified for heightened prudential standards under subtitle B of this Act, unless such financial company is required to establish an intermediate holding company under section 6 of the Bank Holding Company Act, in which case the identified financial holding company is such section 6 holding
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3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 company through which the financial company is required to conduct its financial activities. (6) The term primary financial regulatory agency means the following: (A) The Comptroller of the Currency, with respect to any national bank, any Federal branch or Federal agency of a foreign bank, and, after the date on which the functions of the Office of Thrift Supervision and the Director of the Office of Thrift Supervision are transferred under subtitle C, a Federal savings association. (B) The Board, with respect to (i) a State member bank; (ii) any bank holding company and any subsidiary of such company (as such terms are defined in the Bank Holding Company Act), other than a subsidiary that is described in any other subparagraph of this paragraph to the extent that the subsidiary is engaged in an activity described in such subparagraph; (iii) any identified financial holding company and any subsidiary (as such term is defined in the Bank Holding Company
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4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Act) of such company, other than a subsidiary that is described in any other subparagraph of this paragraph to the extent that the subsidiary is engaged in an activity described in such subparagraph; (iv) after the date on which the functions of the Office of Thrift Supervision are transferred under subtitle C, any savings and loan holding company (as defined in section 10(a)(1)(D) of the Home Owners Loan Act) and any subsidiary (as such term is defined in the Bank Holding Company Act) of a such company, other than a subsidiary that is described in any other subparagraph of this paragraph, to the extent that the subsidiary is engaged in an activity described in such subparagraph; (v) any organization organized and operated under section 25 or 25A of the Federal Reserve Act (12 U.S.C. 601 et seq. or 611 et seq.); and (vi) any foreign bank or company that is treated as a bank holding company under subsection (a) of section 8 of the International Banking Act of 1978 applies
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5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 and any subsidiary (other than a bank or other subsidiary that is described in any other subparagraph of this paragraph) of any such foreign bank or company. (C) The Federal Deposit Insurance Corporation, with respect to a State nonmember bank, any insured State branch of a foreign bank (as such terms are defined in section 3 of the Federal Deposit Insurance Act), and, after the date on which the functions of the Office of Thrift Supervision are transferred under subtitle C, any State savings association. (D) 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.). (E) The Securities and Exchange Commission, with respect to (i) any broker or dealer registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.); (ii) any investment company registered with the Securities and Exchange Commission under the Investment Com-
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6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 pany Act of 1940 (15 U.S.C. 80a1 et seq.); (iii) any investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940 (15 U.S.C. 80b1 et seq.) with respect to the investment advisory activities of such company and activities incidental to such advisory activities; and (iv) any clearing agency registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.). (F) The Commodity Futures Trading Commission, with respect to (i) any futures commission merchant, any commodity trading adviser, and 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 commodities activities of such entity and activities incidental to such commodities activities; and Text missing?
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7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (G) The Federal Housing Finance Agency with respect to the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, and the Federal home loan banks. (H) The State insurance authority of the State in which an insurance company is domiciled, with respect to the insurance activities and activities incidental to such insurance activities of an insurance company that is subject to supervision by the State insurance authority under State insurance law. (I) The Office of Thrift Supervision, with respect to any Federal savings association, State savings association, or savings and loan holding company, until the date on which the functions of the Office of Thrift Supervision are transferred under subtitle C. (7) TERMS
DEFINED IN OTHER LAWS.
(A) AFFILIATE.The term affiliate has the meaning given such term in section 2(k) of the Bank Holding Company Act of 1956. (B) STATE
MEMBER MEMBER BANK, STATE NON-
BANK.The
terms State member
bank and State nonmember bank have the
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8 1 2 3 4 same meanings as in subsections (d)(2) and (e)(2), respectively, of section 3 of the Federal Deposit Insurance Act. (c) TABLE
OF
CONTENTS.The table of contents for
5 this Act is as follows:

Sec. 1000. Short title; definitions; table of contents. Subtitle AThe Financial Services Oversight Council Sec. Sec. Sec. Sec. Financial Services Oversight Council established. Resolution of disputes among Federal financial regulatory agencies. Technical and professional advisory committees. Financial Services Oversight Council meetings and council governance. Sec. 1005. Council staff and funding. Sec. 1006. Reports to the Congress. Sec. 1007. Applicability of certain Federal laws. Subtitle BPrudential Regulation of Companies and Activities for Financial Stability Purposes Sec. 1101. Council and Board authority to obtain information. Sec. 1102. Council prudential regulation recommendations to primary regulators. Sec. 1103. Identification of financial companies for heightened prudential standards for financial stability purposes. Sec. 1104. Regulation of identified financial holding companies for financial stability purposes. Sec. 1105. Authority to file involuntary petition for bankruptcy. Sec. 1106. Identification of activities or practices for heightened prudential standards and safeguards for financial stability purposes. Sec. 1107. Regulation of identified activities for financial stability purposes. Sec. 1108. Effect of rescission of identification. Sec. 1109. Emergency financial stabilization. Sec. 1110. Examinations and enforcement actions for insurance and resolutions purposes. Sec. 1111. Rule of construction. Subtitle CImprovements to Supervision and Regulation of Federal Depository Institutions Sec. 1201. Definitions. Sec. 1202. Amendments to the Home Owners Loan Act relating to transfer of functions. Sec. 1203. Amendments to the revised statutes. Sec. 1204. Power and duties transferred. Sec. 1205. Transfer date. Sec. 1206. Office of Thrift Supervision abolished. Sec. 1207. Savings provisions. Sec. 1208. Regulations and orders. Sec. 1209. Coordination of transition activities.
1001. 1002. 1003. 1004.
9
Sec. 1210. Interim responsibilities of office of the comptroller of the currency and office of thrift supervision. Sec. 1211. Employees transferred. Sec. 1212. Property transferred. Sec. 1213. Funds transferred. Sec. 1214. Disposition of affairs. Sec. 1215. Continuation of services. Sec. 1216. Treatment of savings and loan holding companies. Sec. 1217. Practices of certain mutual thrift holding companies preserved. Sec. 1218. Composition of board of directors of the Federal Deposit Insurance Corporation. Sec. 1219. Amendments to section 3. Sec. 1220. Amendments to section 7. Sec. 1221. Amendments to section 8. Sec. 1222. Amendments to section 11. Sec. 1223. Amendments to section 13. Sec. 1224. Amendments to section 18. Sec. 1225. Amendments to section 28. Sec. 1226. Amendments to the Alternative Mortgage Transaction Parity Act of 1982. Sec. 1227. Amendments to the Bank Holding Company Act of 1956. Sec. 1228. Amendments to the Bank Protection Act of 1968. Sec. 1229. Amendments to the Bank Service Company Act. Sec. 1230. Amendments to the Community Reinvestment Act of 1977. Sec. 1231. Amendments to the Depository Institution Management Interlocks Act. Sec. 1232. Amendments to the Emergency Homeowners Relief Act. Sec. 1233. Amendments to the Equal Credit Opportunity Act. Sec. 1234. Amendments to the Federal Credit Union Act. Sec. 1235. Amendments to the Federal Financial Institutions Examination Council Act of 1978. Sec. 1236. Amendments to the Federal Home Loan Bank Act. Sec. 1237. Amendments to the Federal Reserve Act. Sec. 1238. Amendments to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. Sec. 1239. Amendments to the Housing Act of 1948. Sec. 1240. Amendments to the Housing and Community Development Act of 1992. Sec. 1241. Amendments to the Housing and Urban-Rural Recovery Act of 1983. Sec. 1242. Amendments to the National Housing Act. Sec. 1243. Amendments to the Right to Financial Privacy Act of 1978. Sec. 1244. Amendments to the Balanced Budget and Emergency Deficit Control Act of 1985. Sec. 1245. Amendments to the Crime Control Act of 1990. Sec. 1246. Amendment to the Flood Disaster Protection Act of 1973. Sec. 1247. Amendments to the Investment Company Act of 1940. Sec. 1248. Amendments to the Neighborhood Reinvestment Corporation Act. Sec. 1249. Amendments to the Securities Exchange Act of 1934. Sec. 1250. Amendments to title 18, United States Code. Sec. 1251. Amendments to title 31, United States Code. Subtitle DFurther Improvements to the Regulation of Bank Holding Companies and Depository Institutions
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10
Sec. 1301. Treatment of credit card banks, industrial loan companies, and certain other companies under the bank holding company act. Sec. 1302. Registration of certain companies as bank holding companies. Sec. 1303. Reports and examinations of bank holding companies; regulation of functionally regulated subsidiaries. Sec. 1304. Requirements for financial holding companies to remain well capitalized and well managed. Sec. 1305. Standards for interstate acquisitions. Sec. 1306. Enhancing existing restrictions on bank transactions with affiliates. Sec. 1307. Eliminating exceptions for transactions with financial subsidiaries. Sec. 1308. Lending limits applicable to credit exposure on derivative transactions, repurchase agreements, reverse repurchase agreements, and securities lending and borrowing transactions. Sec. 1309. Application of national bank lending limits to insured State banks. Sec. 1310. Restriction on conversions of troubled banks. Sec. 1311. Lending limits to insiders. Sec. 1312. Limitations on purchases of assets from insiders. Sec. 1313. Rules regarding capital levels of bank holding companies. Sec. 1314. Enhancements to factors to be considered in certain acquisitions. Sec. 1315 Elimination of elective investment bank holding company framework. Sec. 1316. Examination fees for large bank holding companies. Subtitle EPayment, Clearing, and Settlement Supervision Sec. Sec. Sec. Sec. 1401. 1402. 1403. 1404. Short title. Findings and purposes. Definitions. Identification of systemically important financial market utilities and payment, clearing, and settlement activities. Standards for systemically important financial market utilities and payment, clearing, or settlement activities. Operations and changes to rules, procedures, or operations of identified financial market utilities. Examination of and enforcement actions against identified financial market utilities. Examination of and enforcement actions against identified financial market utilities. Examination of and enforcement actions against financial institutions subject to standards for identified activities. Provision of information, reports, or records. Rulemaking. Other authority. Effective date.
Sec. 1405. Sec. 1406. Sec. 1407. Sec. 1407. Sec. 1408. Sec. Sec. Sec. Sec. 1409. 1410. 1411. 1412.
Subtitle FImprovements to the Asset-Backed Securitization Process Sec. 1501. Short title. Sec. 1502. Credit risk retention. Sec. 1503. Periodic and other reporting under the Securities Exchange Act of 1934 for asset-backed securities. Sec. 1504. Representations and warranties in asset-backed offerings. Sec. 1505. Exempted transactions under the Securities Act of 1933. Subtitle GEnhanced Resolution Authority Sec. 1601. Short title.
11
Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. 1602. 1603. 1604. 1605. 1606. Definitions. Systemic risk determination. Resolution; stabilization. Judicial review. Directors not liable for acquiescing in appointment of receiver or qualified receiver. 1607. Termination and exclusion of other actions. 1608. Rulemaking. 1609 Powers and duties of corporation. 1610. Clarification of prohibition regarding concealment of assets from qualified receiver, receiver, or liquidating agent. 1611. Miscellaneous provisions.
Subtitle HAdditional Improvements for Financial Crisis Management Sec. 1701. Additional improvements for financial crisis management.
1 2 3 4 5
Subtitle AThe Financial Services Oversight Council

SEC. 1001. FINANCIAL SERVICES OVERSIGHT COUNCIL ESTABLISHED.
(a) ESTABLISHMENT.Immediately upon enactment
6 of this title, there is established a Financial Services Over7 sight Council. 8 (b) MEMBERSHIP.The Council shall consist of the
9 following: 10 11 12 13 14 15 16 17 18
(1) VOTING
MEMBERS.Voting
members, who
shall each have one vote on the Council, as follows: (A) The Secretary of the Treasury, who shall serve as the Chairman of the Council; (B) The Chairman of the Board of Governors of the Federal Reserve System; (C) The Comptroller of the Currency. (D) The Director of the Office of Thrift Supervision, until the functions of the Director
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12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of the Office of Thrift Supervision are transferred to pursuant to subtitle C of this title; (E) The Chairman of the Securities and Exchange Commission. (F) The Chairman of the Commodity Futures Trading Commission. (G) The Chairperson of the Federal Deposit Insurance Corporation. (H) The Director of the Federal Housing Finance Agency. (I) The Chairman of the National Credit Union Administration. (2) NONVOTING
MEMBERS.Nonvoting
mem-
bers, who shall serve in an advisory capacity: (A) A State insurance commissioner, to be designated by a selection process determined by the State insurance commissioners, provided that the term for which a State insurance commissioner may serve shall last no more than the 2-year period beginning on the date that the commissioner is selected. (B) A State banking supervisor, to be designated by a selection process determined by the State bank supervisors, provided that the term for which a State banking supervisor may
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13 1 2 3 4 serve shall last no more than the 2-year period beginning on the date that the supervisor is selected. (c) DUTIES.The Council shall have the following
5 duties. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (1) To advise the Congress on financial regulation and make recommendations that will enhance the integrity, efficiency, orderliness, competitiveness, and stability of the United States financial markets. (2) To monitor the financial services marketplace to identify potential threats to the stability of the United States financial system. (3) To identify financial companies and financial activities that should be subject to heightened prudential standards in order to promote financial stability and mitigate systemic risk in accordance with sections subtitles B and E of this title. (4) To issue formal recommendations that a Council member agency adopt heightened prudential standards for firms it regulates to mitigate systemic risk in accordance with subtitle B of this title. (5) To facilitate information sharing and coordination among the members of the Council regarding financial services policy development,
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14 1 2 3 4 5 6 7 8 9 10 11 12 13 rulemakings, examinations, reporting requirements, and enforcement actions. (6) To provide a forum for discussion and analysis of emerging market developments and financial regulatory issues among its members. (7) At the request of an agency that is a Council member, to resolve a jurisdictional or regulatory dispute between that agency and another agency that is a Council member in accordance with section 1002 of this subtitle.
SEC. 1002. RESOLUTION OF DISPUTES AMONG FEDERAL FINANCIAL REGULATORY AGENCIES.
(a) REQUEST
FOR
DISPUTE RESOLUTION.The
14 Council shall resolve a dispute among 2 or more Federal 15 financial regulatory agencies if 16 17 18 19 20 21 22 23 24 25 (1) a Federal financial regulatory agency has a dispute with another Federal financial regulatory agency about the agencies respective jurisdiction over a particular financial company or financial activity or product (excluding matters for which another dispute mechanism specifically has been provided under Federal law); (2) the disputing agencies cannot, after a demonstrated good faith effort, resolve the dispute among themselves;
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15 1 2 3 4 5 6 7 8 9 10 (3) any of the Federal financial regulatory agencies involved in the dispute (A) provides all other disputants prior notice of its intent to request dispute resolution by the Council; and (B) requests in writing, no earlier than 14 days after providing the notice described in paragraph (A), that the Council resolve the dispute. (b) COUNCIL DECISION.The Council shall decide
11 the dispute 12 13 14 15 16 17 18 19 (1) within a reasonable time after receiving the dispute resolution request; (2) after consideration of relevant information provided by each 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
AND
BINDING EFFECT.A Council deci-
20 sion under this section shall be in writing and include an 21 explanation and shall be binding on all Federal financial 22 regulatory agencies that are parties to the dispute. 23 24 25
SEC. 1003. TECHNICAL AND PROFESSIONAL ADVISORY COMMITTEES.
The Council is authorized to appoint
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16 1 2 3 4 5 6 7 8 9 10 11 (1) subsidiary working groups composed of Council members and their staff, Council staff, or a combination; and (2) such temporary special advisory, technical, or professional committees as may be useful in carrying out its functions, which may be composed of Council members and their staff, other persons, or a combination.
SEC. 1004. FINANCIAL SERVICES OVERSIGHT COUNCIL MEETINGS AND COUNCIL GOVERNANCE.
(a) MEETINGS.The Council shall meet as fre-
12 quently as the Chairman deems necessary, but not less 13 than quarterly. 14 (b) VOTING.Unless otherwise provided, the Council
15 shall make all decisions the Council is required or author16 ized to make by a majority of the total voting membership 17 of the Council under section 1001(b)(1). 18 19
SEC. 1005. COUNCIL STAFF AND FUNDING.
(a) DEPARTMENT
OF THE
TREASURY.The Sec-
20 retary of the Treasury shall 21 22 23 24 25 (1) detail permanent staff from the Department of the Treasury to provide the Council (and any temporary special advisory, technical, or professional committees appointed by the Council) with professional and expert support; and
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17 1 2 3 4 5 (2) provide such other services and facilities necessary for the performance of the Councils functions and fulfillment of the duties and mission of the Council. (b) OTHER DEPARTMENTS AND AGENCIES.In addi-
6 tion to the assistance prescribed in subsection (a), depart7 ments and agencies of the United States may, with the 8 approval of the Secretary of the Treasury 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (1) detail department or agency staff on a temporary basis to provide additional support to the Council (and any special advisory, technical, or professional committees appointed by the Council); and (2) provide such services, and facilities as the other departments or agencies may determine advisable. (c) STAFF STATUS; COUNCIL FUNDING. (1) STATUS.Staff detailed to the Council by the Secretary of the Treasury and other United States departments or agencies shall (A) report to and be subject to oversight by the Council during their assignment to the Council; and (B) be compensated by the department of agency from which the stall was detailed.
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18 1 2 3 4 5 6 (2) FUNDING.The administrative expense of the Council shall be paid by the departments and agencies represented by voting members of the Council on an equal basis.
SEC. 1006. REPORTS TO THE CONGRESS.
(a) IN GENERAL.The Council shall submit an an-
7 nual report to the Committee on Financial Services of the 8 House of Representatives and the Committee on Banking, 9 Housing, and Urban Affairs of the Senate that 10 11 12 13 14 15 16 17 18 19 20 (1) describes significant financial market developments and potential emerging threats to the stability of the financial system; (2) recommends actions that will improve financial stability; (3) describes any company or activity identifications made under subtitles B and E; and (4) describes any dispute resolutions undertaken under section 1002 and the result of such resolutions. (b) CONFIDENTIALITY.The Committees of the Con-
21 gress receiving the Councils report shall maintain the con22 fidentiality of the identity of companies described in ac23 cordance with subsection (a)(3) and the information relat24 ing to dispute resolutions described in accordance with 25 subsection (a)(4).
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19 1 2
SEC. 1007. APPLICABILITY OF CERTAIN FEDERAL LAWS.
(a) The Federal Advisory Committee Act shall not
3 apply to the Financial Services Oversight Council, or any 4 special advisory, technical, or professional committees ap5 pointed by the Council (except that, if an advisory, tech6 nical, or professional committee has one or more members 7 who are not employees of or affiliated with the United 8 States government, the Council shall publish a list of the 9 names of the members of such committee). 10 (b) The Council shall not be deemed an agency for
11 purposes of any State or Federal law. 12 13 14 15 16 17
Subtitle BPrudential Regulation of Companies and Activities for Financial Stability Purposes
SEC. 1101. COUNCIL AND BOARD AUTHORITY TO OBTAIN INFORMATION.
(a) IN GENERAL.The Council and the Board are
18 authorized to receive, and may request the production of, 19 any data or information from members of the Council, as 20 necessary 21 22 23 24 25 (1) to monitor the financial services marketplace to identify potential threats to the stability of the United States financial system; or (2) to otherwise carry out any of the provisions of this title, including to ascertain a primary finan-
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20 1 2 3 cial regulatory agencys implementation of recommended prudential standards under this subtitle. (b) SUBMISSION
BY
COUNCIL MEMBERS.Notwith-
4 standing any provision of law, any voting or nonvoting 5 member of the Council is authorized to provide informa6 tion to the Council, and the members of the Council shall 7 maintain the confidentiality of such information. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (c) FINANCIAL DATA COLLECTION. (1) IN
GENERAL.The
Council or the Board
may require the submission of periodic and other reports from any financial company solely for the purpose of assessing the extent to which a financial activity or financial market in which the financial company participates, or the company itself, poses a threat to financial stability. (2) MITIGATION
OF REPORT BURDEN.Before
requiring the submission of reports from financial companies that are regulated by the Federal financial regulatory agencies, the Council or the Board shall coordinate with such agencies and shall, whenever possible, rely on information already being collected by such agencies. (d) CONSULTATION WITH AGENCIES
TIES.The AND
ENTI-
Council or the Board, as appropriate, may
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21 1 consult with Federal and State agencies and other entities 2 to carry out any of the provisions of this subtitle. 3 4 5
SEC. 1102. COUNCIL PRUDENTIAL REGULATION REC-
OMMENDATIONS TO PRIMARY REGULATORS.
(a) IN GENERAL.The Council is authorized to issue
6 formal recommendations, publicly or privately, that a Fed7 eral financial regulatory agency adopt heightened pruden8 tial standards for firms it regulates to mitigate systemic 9 risk. 10 11 (b) AGENCY AUTHORITY
ARDS.A TO
IMPLEMENT STAND-
Federal financial regulatory agency specifically
12 is authorized to impose, require reports regarding, exam13 ine for compliance with, and enforce heightened prudential 14 standards and safeguards for the firms it regulates to 15 mitigate systemic risk. This authority is in addition to and 16 does not limit any other authority of the Federal financial 17 regulatory agencies. Compliance by an entity with actions 18 taken by a Federal financial regulatory agency under this 19 section shall be enforceable in accordance with the statutes 20 governing the respective Federal financial regulatory 21 agencys jurisdiction over the entity as if the agency action 22 were taken under those statutes. 23 (c) AGENCY NOTICE
TO
COUNCIL.A Federal finan-
24 cial regulatory agency shall, within 60 days of receiving
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22 1 a Council recommendation under this section, notify the 2 Council in writing regarding 3 4 5 6 7 8 9 10 11 12 (1) the actions the Federal financial regulatory agency has taken in response to the Councils recommendation; or (2) the reason the Federal financial regulatory agency has failed to respond to the Councils request.
SEC. 1103. IDENTIFICATION OF FINANCIAL COMPANIES FOR HEIGHTENED PRUDENTIAL STANDARDS FOR FINANCIAL STABILITY PURPOSES.
(a) IN GENERAL.The Council may subject a finan-
13 cial company to heightened prudential standards under 14 section 1104 if the Council determines that 15 16 17 18 19 20 21 (1) material financial distress at the company could pose a threat to financial stability or the economy; or (2) the nature, scope, or mix of the companys activities could pose a threat to financial stability or the economy. (b) CRITERIA.In making a determination under
22 subsection (a), the Council shall consider the following cri23 teria: 24 25 (1) The amount and nature of the companys financial assets.
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23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (2) The amount and nature of the companys liabilities, including the degree of reliance on shortterm funding. (3) The extent and nature of the companys offbalance sheet exposures. (4) The extent and nature of the companys transactions and relationships with other financial companies. (5) The companys importance as a source of credit for households, businesses, and State and local governments and as a source of liquidity for the financial system. (6) The nature, scope, and mix of the companys activities. (7) Any other factors that the Council deems appropriate. (c) PERIODIC REVIEW
INGS. AND
RESCISSION
OF
FIND-
(1) SUBMISSION
OF ASSESSMENT.The
Board
shall periodically submit a report to the Council containing an assessment of whether each company subjected to heightened prudential standards should continue to be subject to such standards. (2) REVIEW shall
AND RESCISSION.The
Council
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24 1 2 3 4 5 6 7 8 9 10 11 12 (A) review the assessment submitted pursuant to paragraph (1) and any information or recommendation submitted by members of the Council regarding whether an identified financial holding company continues to merit heightened prudential standards; and (B) rescind the action subjecting a company to heightened prudential supervision if the Council determines that the company no longer meets the conditions for identification in subsections (a) and (b). (d) PROCEDURE
FOR
IDENTIFYING
OR
RESCINDING
13 IDENTIFICATION OF A COMPANY. 14 15 16 17 18 19 20 21 22 23 24 25 (1) COUNCIL

AND BOARD COORDINATION.The
Council shall inform the Board if the Council is considering whether to identify or cease to identify a company under this section. (2) NOTICE
AND OPPORTUNITY FOR CONSIDER-
ATION OF WRITTEN MATERIALS.
(A) IN
GENERAL.The
Board shall, in an
executive capacity on behalf of the Council, inform a financial company that the Council is considering whether to identify or cease to identify such company under this section, including an explanation of the basis of the Councils con-
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25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 sideration, and shall provide such financial company 30 days to submit written materials to inform the Councils decision. The Council shall make its decision, and the Board shall notify the company of the Councils decision by order, within 60 days of the due date for such written materials (B) EMERGENCY
REQUIREMENTS.The EXCEPTION TO PROCESS
Council may waive or
modify the requirements of subparagraph (A) with respect to a company if the Council determines that such waiver or modification is necessary or appropriate to prevent or mitigate threats posed by the company to financial stability. The Board shall, in an executive capacity on behalf of the Council, provide notice of such waiver or modification to the financial company concerned as soon as practicable, which shall be no later than 24 hours after the waiver or modification. (3) CONSULTATION.If a financial company being considered for identification under this section is, or has one or more subsidiaries that are, subject to regulation by a Federal financial regulatory agency, as such subsidiaries are described in section
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26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2(6) of this subtitle, the Council shall consult with the relevant Federal financial regulatory agency for each such subsidiary before making any decision under this section. (4) EMERGENCY
EXCEPTION TO MAJORITY
VOTE OF COUNCIL REQUIREMENT.If
each of the
Secretary of the Treasury, the Board, and the Federal Deposit Insurance Corporation determines that a financial company must be subjected to heightened prudential standards under this section immediately to prevent destabilization of the financial system or economy, the Secretary, the Board, and the Corporation may identify a financial company under this section upon certification by the President of the United States. (e) EFFECT OF IDENTIFICATION. (1) APPLICATION
PANY ACT.A OF THE BANK HOLDING COM-
financial company that is not a bank
holding company as defined in the Bank Holding Company Act at the time of its identification under this section, shall (A) if such company conducts at the time of its identification only activities that are determined to be financial in nature or incidental thereto under section 4(k) of the Bank Holding
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27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Company Act, be treated as a bank holding company that has elected to be a financial holding company for purposes of the Bank Holding Company Act of 1956, as amended, the Federal Deposit Insurance Act, as amended, and all other Federal laws and regulations governing bank holding companies and financial holding companies; or (B) if such company conducts at the time of its identification 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, be required to establish and conduct all its activities that are determined to be financial in nature or incidental thereto under section 4(k) of the Bank Holding Company Act in an intermediate holding company established under section 6 of the Bank Holding Company Act, which intermediate holding company shall be the identified financial holding company for purposes of this subtitle. (2) EXEMPTIVE
AUTHORITY.Notwithstanding
any provision of the Bank Holding Company Act, the Board may, if it determines such action is necessary to ensure appropriate heightened prudential
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28 1 2 3 4 5 6 7 8 9 supervision, issue such exemptions from that Act as may be necessary with regard to identified financial holding companies that do not control an insured depository institution. (3) HEIGHTENED
PRUDENTIAL REGULATION.
The Board shall apply heightened prudential standards to each identified financial holding company subject to this title. (f) NO PUBLIC LIST
OF
IDENTIFIED COMPANIES.
10 The Council and the Board may not publicly release a list 11 of companies identified under this section. 12 13 14 15 16 17 18 19 20 21 22 23 24 25
SEC. 1104. REGULATION OF IDENTIFIED FINANCIAL HOLDING COMPANIES FOR FINANCIAL STABILITY PURPOSES.
(a) PRUDENTIAL STANDARDS

NANCIAL
FOR
IDENTIFIED FI-
HOLDING COMPANIES. (1) IN

GENERAL.To
mitigate risks to finan-
cial stability and the economy posed by an identified financial holding company, the Board shall impose heightened prudential standards on such company. Such standards shall be designed to maximize financial stability taking costs to long-term financial and economic growth into account, be heightened when compared to the standards that otherwise would apply to financial holding companies that are not
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29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 identified pursuant to this subtitle (including by addressing additional or different types of risks than otherwise applicable standards), and reflect the potential risk posed to financial stability by the identified financial holding company. (2) STANDARDS. (A) REQUIRED STANDARDS. The
heightened standards imposed by the Board under this section shall include (i) risk-based capital requirements; (ii) leverage limits; (iii) liquidity requirements; (iv) concentration requirements (as specified in subsection (c)); (v) prompt corrective action requirements (as specified in subsection (d)); (vi) resolution plan requirements (as specified in subsection (e)); and (vii) overall risk management requirements. (B) ADDITIONAL
STANDARDS.The
heightened standards imposed by the Board under this section also may include any other prudential standards that the Board deems ad-
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30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 visable, including taking actions to mitigate systemic risk (as specified in paragraph (5). (3) APPLICATION
OF REQUIRED STANDARDS.
In imposing prudential standards under this subsection, the Board may differentiate among identified financial holding companies on an individual basis or by category, taking into consideration their capital structure, risk, complexity, financial activities, the financial activities of their subsidiaries, and any other factors that the Board deems appropriate. (4) WELL
AGED.An CAPITALIZED AND WELL MAN-
identified financial holding company
shall at all times after it files its registration statement as an identified financial holding company be well capitalized and well managed as defined by the Board. (5) MITIGATION
OF SYSTEMIC RISK.If
the
Board determines, after notice and an opportunity for hearing, that the size of an identified financial holding company or the scope or nature of activities directly or indirectly conducted by an identified financial holding company poses a threat to the safety and soundness of such company or to the financial stability of the United States, the Board may require the identified financial holding company to sell
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31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 or otherwise transfer assets or off-balance sheet items to unaffiliated firms, to terminate one or more activities, or to impose conditions on the manner in which the identified financial holding company conducts one or more activities. (6) APPLICATION
PANIES.The TO FOREIGN FINANCIAL COM-
Board shall prescribe regulations re-
garding the application of heightened prudential standards to financial companies that are organized or incorporated in a country other than the United States, and that own or control a Federal or State branch, subsidiary, or operating entity that is an identified financial holding company, giving due regard to the principle of national treatment and equality of competitive opportunity. (b) PRUDENTIAL STANDARDS
AND AT
FUNCTIONALLY
17 REGULATED SUBSIDIARIES 18 19 20 21 22 23 24 25
TORY INSTITUTIONS.
SUBSIDIARY DEPOSI-
(1) BOARD
ARDS.With
AUTHORITY TO RECOMMEND STAND-
respect to a functionally regulated sub-
sidiary (as such term is defined in section 5 of the Bank Holding Company Act) or a subsidiary depository institution of an identified financial holding company, the Board may recommend that the relevant primary financial regulatory agency for such
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32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 functionally regulated subsidiary or subsidiary depository institution prescribe heightened prudential standards on such functionally regulated subsidiary or subsidiary depository institution. Any standards recommended by the Board under this section shall be of the same type as those described in subsection (a)(2) that the Board is required or authorized to impose directly on the identified financial holding company. (2) AGENCY
AUTHORITY TO IMPLEMENT
HEIGHTENED STANDARDS AND SAFEGUARDS.Each
primary financial regulatory agency that receives a Board recommendation under paragraph (1) is authorized to impose, require reports regarding, examine for compliance with, and enforce standards under this subsection with respect to the entities described in section 2(6) for which it is the primary financial regulatory agency. This authority is in addition to and does not limit any other authority of the primary financial regulatory agencies. 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 agencys jurisdiction over the
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33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 entity as if the agency action were taken under those statutes. (3) IMPOSITION
OF STANDARDS.Standards
imposed by a primary financial regulatory agency under this subsection shall be the standards recommended by the Board or any other similar standards that the Board deems acceptable after consultation between the Board and the primary financial regulatory agency. (4) FAILURE
TO ADOPT STANDARDS; NOTICE
TO COUNCIL AND BOARD.If
a primary financial
regulatory agency fails to implement the prudential standards recommended by the Board or other similar standards that are acceptable to the Board within 60 days of the Boards recommendation, the agency shall justify in writing the failure of such agency to act to the Council and the Board within that same time period. (5) BACKUP (A) IN
AUTHORITY OF THE BOARD. GENERAL.When
notified that a
primary financial regulatory agency has failed to impose the heightened prudential standards recommended by the Board for financial stability purposes under this subsection, the Board is authorized to directly impose, require reports
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34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 regarding, examine for compliance with, and enforce such heightened prudential standards under this subsection with respect to a functionally regulated subsidiary for which the primary financial regulatory agency ordinarily is responsible. (B) LIMITATIONS
THORITY.The ON BOARD BACKUP AU-
Boards standard-imposition,
report-related, examination, and enforcement activities under this subsection shall be limited to the heightened prudential standards imposed under this subsection. (c) CONCENTRATION LIMITS
NANCIAL FOR
IDENTIFIED FI-
HOLDING COMPANIES. (1) STANDARDS.In order to limit the risks
that the failure of any company could pose to an identified financial holding company and to the stability of the United States financial system, the Board, by regulation, shall prescribe standards that limit the risks posed by the exposure of an identified financial holding company to any other company. (2) LIMITATION
ON CREDIT EXPOSURE.The
regulations prescribed by the Board shall prohibit each identified financial holding company from having credit exposure to any unaffiliated company that
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35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 exceeds 25 percent of the identified financial holding companys capital stock and surplus or such lower amount as the Board may determine by regulation to be necessary to mitigate risks to financial stability. (3) CREDIT
EXPOSURE.For
purposes of this
subsection, an identified financial holding companys 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 agreement with the company; (C) all securities borrowing and lending transactions with the company to the extent that such transactions create credit exposure of the identified financial holding company to the company; (D) all guarantees, acceptances, or letters of credit (including endorsement or standby letters of credit) issued on behalf of the company; (E) all purchases of or investment in securities issued by the company; (F) counterparty credit exposure to the company in connection with a derivative trans-
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36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 action between the identified financial holding company and the company; and (G) any other similar transactions that the Board by regulation determines to be a credit exposure for purposes of this section. (4) ATTRIBUTION
RULE.For
purposes of this
subsection, any transaction by an identified financial holding company with any person is deemed 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 may issue such regulations and orders, including definitions consistent with this subsection, as may be necessary to administer and carry out the purpose of this subsection. (6) EXEMPTIONS.The Board may, by regulation or order, exempt transactions, in whole or in part, from the definition of credit exposure if it finds that the exemption is in the public interest and consistent with the purpose of this subsection. (7) TRANSITION
PERIOD.This
subsection and
any regulations and orders of the Board under the authority of this subsection shall not be effective until three years from the effective date of this sub-
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37 1 2 3 4 section. The Board can extend the effective date for up to two additional years to promote financial stability. (d) PROMPT CORRECTIVE ACTION
FOR
IDENTIFIED
5 FINANCIAL HOLDING COMPANIES. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (1) PROMPT

CORRECTIVE ACTION REQUIRED.
The Board shall take prompt corrective action to resolve the problems of identified financial holding companies. (2) DEFINITIONS.For purposes of this section (A) CAPITAL
CATEGORIES. CAPITALIZED.An
(i) WELL
identi-
fied financial holding company is well capitalized if it exceeds the required minimum level for each relevant capital measure. (ii) UNDERCAPITALIZED.An identified financial holding company is undercapitalized if it fails to meet the required minimum level for any relevant capital measure. (iii) SIGNIFICANTLY
IZED.An UNDERCAPITAL-
identified
financial
holding
company is significantly undercapitalized
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38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 if it is significantly below the required minimum level for any relevant capital measure. (iv)
IZED.An
CRITICALLY identified
UNDERCAPITAL-
financial
holding
company is critically undercapitalized if it fails to meet any level specified in paragraph (4)(C)(i). (3) OTHER
DEFINITIONS.
(A) AVERAGE.The average of an accounting item (such as total assets or tangible equity) during a given period means the sum of that item at the close of business on each business day during that period divided by the total number of business days in that period. (B) CAPITAL
DISTRIBUTION.The
term
capital distribution means (i) a distribution of cash or other property by an identified financial holding company to its owners made on account of that ownership, but not including any dividend consisting only of shares of the identified financial holding company or rights to purchase such shares;
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39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (ii) a payment by an identified financial holding company to repurchase, redeem, retire, or otherwise acquire any of its shares or other ownership interests, including any extension of credit to finance any persons acquisition of those shares or interests; or (iii) a transaction that the Board determines, by order or regulation, to be in substance a distribution of capital to the owners of the identified financial holding company. (C) CAPITAL
RESTORATION PLAN.The
term capital restoration plan means a plan submitted under paragraph (6)(B). (D) COMPENSATION.The term compensation includes any payment of money or provision of any other thing of value in consideration of employment. (E) RELEVANT
CAPITAL MEASURE.The
term relevant capital measure means the measures described in paragraph (4). (F) REQUIRED
MINIMUM LEVEL.The
term required minimum level means, with respect to each relevant capital measure, the min-
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40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 imum acceptable capital level specified by the Board by regulation. (G) SENIOR
EXECUTIVE OFFICER.The
term senior executive officer has the same meaning as the term executive officer in section 22(h) of the Federal Reserve Act (12 U.S.C. 375b). (4) CAPITAL
STANDARDS. CAPITAL MEASURES.
(A) RELEVANT (i) IN
GENERAL.Except
as provided
in clause (ii)(II), the capital standards prescribed by the Board under subsection 6(c) of the Bank Holding Company Act of 1956 (12 U.S.C. 1845(c)) shall include (I) a leverage limit; and (II) a risk-based capital requirement. (ii) OTHER
CAPITAL MEASURES.The
Board may by regulation (I) establish any additional relevant capital measures to carry out this section; or (II) rescind any relevant capital measure required under clause (i) upon determining that the measure is
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41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 no longer an appropriate means for carrying out this section. (B) CAPITAL
CATEGORIES GENERALLY.
The Board shall, by regulation, specify for each relevant capital measure the levels at which an identified financial holding company is well capitalized, undercapitalized, and significantly
undercapitalized. (C) CRITICAL

CAPITAL. TO SPECIFY LEVEL.
(i) BOARD (I)
LEVERAGE
LIMIT.The
Board shall, by regulation, specify the ratio of tangible equity to total assets at which an identified financial holding company is critically undercapitalized. (II) OTHER
MEASURES.The RELEVANT CAPITAL
Board may, by reg-
ulation, specify for 1 or more other relevant capital measures, the level at which an identified financial holding company is critically undercapitalized. (ii) LEVERAGE
LIMIT RANGE.The
level specified under clause (i)(I) shall require tangible equity in an amount
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42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (I) not less than 2 percent of total assets; and (II) except as provided in subclause (I), not more than 65 percent of the required minimum level of capital under the leverage limit. (5) CAPITAL (A) IN
DISTRIBUTIONS RESTRICTED. GENERAL.An
identified financial
holding company shall make no capital distribution if, after making the distribution, the identified financial holding company would be undercapitalized. (B) EXCEPTION.Notwithstanding subparagraph (A), the Board may permit an identified financial holding company to repurchase, redeem, retire, or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement, or other acquisition (i) is made in connection with the issuance of additional shares or obligations of the identified financial holding company in at least an equivalent amount; and (ii) will reduce the identified financial holding companys financial obligations or
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43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (6) otherwise improve the identified financial holding companys financial condition. PROVISIONS
APPLICABLE TO UNDER-
CAPITALIZED IDENTIFIED FINANCIAL COMPANIES.
(A) MONITORING shall
REQUIRED.The
Board
(i) closely monitor the condition of any undercapitalized identified financial holding company; (ii) closely monitor compliance by any undercapitalized identified financial holding company with capital restoration plans, restrictions, and requirements imposed under this section; and (iii) periodically review the plan, restrictions, and requirements applicable to any undercapitalized identified financial holding company to determine whether the plan, restrictions, and requirements are effective. (B) CAPITAL
QUIRED. RESTORATION PLAN RE-
(i) IN
GENERAL.Any
undercapital-
ized identified financial holding company shall submit an acceptable capital restora-
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44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 tion plan to the Board within the time allowed by the Board under clause (iv). (ii) CONTENTS
OF PLAN.The
capital
restoration plan shall (I) specify (aa) the steps the identified financial holding company will take to become well capitalized; (bb) the levels of capital to be attained by the identified financial holding company during each year in which the plan will be in effect; (cc) how the identified financial holding company will
comply with the restrictions or requirements then in effect under this section; and (dd) the types and levels of activities in which the identified financial holding company will engage; and (II) contain such other information that the Board may require.
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45 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (B); (II) is based on realistic assumptions, and is likely to succeed in restoring the identified financial holding companys capital; and (III) would not appreciably increase the risk (including credit risk, interest-rate risk, and other types of risk) to which the identified financial holding company is exposed. (iv) DEADLINES
FOR SUBMISSION AND
(iii)
CRITERIA
FOR
ACCEPTING
PLAN.The
Board shall not accept a cap-
ital restoration plan unless it determines that the plan (I) complies with subparagraph
REVIEW OF PLANS.The
Board shall, by
regulation, establish deadlines that (I) provide identified financial holding companies with reasonable time to submit capital restoration plans, and generally require an identified financial holding company to submit a plan not later than 45 days after it becomes undercapitalized; and
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46 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (II) require the Board to act on capital restoration plans expeditiously, and generally not later than 60 days after the plan is submitted. (C) ASSET
GROWTH RESTRICTED.An
undercapitalized identified financial holding company shall not permit its average total assets during any calendar quarter to exceed its average total assets during the preceding calendar quarter unless (i) the Board has accepted the identified financial holding companys capital restoration plan; (ii) any increase in total assets is consistent with the plan; and (iii) the identified financial holding companys ratio of tangible equity to total assets increases during the calendar quarter at a rate sufficient to enable it to become well capitalized within a reasonable time. (D) PRIOR
APPROVAL REQUIRED FOR AC-
QUISITIONS AND NEW LINES OF BUSINESS.An
undercapitalized identified financial holding company shall not, directly or indirectly, ac-
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47 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 quire any interest in any company or insured depository institution, or engage in any new line of business, unless (i) the Board has accepted the identified financial holding companys capital restoration plan, the identified financial holding company is implementing the plan, and the Board determines that the proposed action is consistent with and will further the achievement of the plan; (ii) the Board determines that the specific proposed action is appropriate; or (iii) the Board has exempted the identified financial holding company from the requirements of this paragraph with respect to the class of acquisitions that includes the proposed action. (E) DISCRETIONARY
SAFEGUARDS.The
Board may, with respect to any undercapitalized identified financial holding company, take actions described in any subparagraph of paragraph (7)(B) if the Board determines that those actions are necessary. (7) PROVISIONS
APPLICABLE TO SIGNIFICANTLY
UNDERCAPITALIZED IDENTIFIED FINANCIAL HOLD-
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48 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
ING COMPANIES AND UNDERCAPITALIZED IDENTIFIED FINANCIAL HOLDING COMPANIES THAT FAIL TO SUBMIT AND IMPLEMENT CAPITAL RESTORATION PLANS.
(A) IN
GENERAL.This
paragraph shall
apply with respect to any identified financial holding company that (i) is significantly undercapitalized; or (ii) is undercapitalized and (I) fails to submit an acceptable capital restoration plan within the time allowed by the Board under subsection (e)(2)(D); or (II) fails in any material respect to implement a capital restoration plan accepted by the Board. (B) SPECIFIC
ACTIONS AUTHORIZED.The
Board shall carry out this paragraph by taking 1 or more of the following actions (i) REQUIRING
RECAPITALIZATION.
Doing one or more of the following (I) Requiring the identified financial holding company to sell
enough shares or obligations of the identified financial holding company
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49 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 so that the identified financial holding company will be well capitalized after the sale. (II) Further requiring that instruments sold under clause (I) be voting shares. (III) Requiring the identified financial holding company to be acquired by or combine with another company. (ii) RESTRICTING
TRANSACTIONS
WITH AFFILIATES.
(I) Requiring the identified financial holding company to comply with section 23A of the Federal Reserve Act (12 U.S.C. 371c), as if it were a member bank. (II) Further restricting the identified financial holding companys
transactions with affiliates and insiders. (iii) RESTRICTING

ASSET GROWTH.
Restricting the identified financial holding companys asset growth more stringently than subsection (6)(C), or requiring the
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50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 identified financial holding company to reduce its total assets. (iv) RESTRICTING
ACTIVITIES.Re-
quiring the identified financial holding company or any of its subsidiaries to alter, reduce, or terminate any activity that the Board determines poses excessive risk to the identified financial holding company. (v) IMPROVING
MANAGEMENT.Doing
one or more of the following: (I) NEW

ELECTION OF DIREC-
TORS.Ordering
a new election for
the identified financial holding companys board of directors. (II) DISMISSING

SENIOR EXECUTIVE DIRECTORS OR OFFICERS.Re-
quiring the identified financial holding company to dismiss from office any director or senior executive officer who had held office for more than 180 days immediately before the identified financial holding company became undercapitalized. Dismissal under this clause shall not be construed to be a removal under section 8 of the Fed-
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51 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 eral Deposit Insurance Act (12 U.S.C. 1818). (III)

SENIOR
EMPLOYING
QUALIFIED
EXECUTIVE
OFFICERS.Re-
quiring the identified financial holding company to employ qualified senior executive officers (who, if the Board so specifies, shall be subject to approval by the Board). (vi) REQUIRING
DIVESTITURE.Re-
quiring the identified financial holding company to divest itself of or liquidate any subsidiary if the Board determines that the subsidiary is in danger of becoming insolvent, poses a significant risk to the identified financial holding company, or is likely to cause a significant dissipation of the identified financial holding companys assets or earnings. (vii) REQUIRING
OTHER ACTION.Re-
quiring the Identified financial company to take any other action that the Board determines will better carry out the purpose of this section than any of the actions described in this paragraph.
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52 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (C) PRESUMPTION
ACTIONS.In IN FAVOR OF CERTAIN
complying with subparagraph
(B), the Board shall take the following actions, unless the Board determines that the actions would not be appropriate (i) The action described in subclause (I) or (II) of subparagraph (B)(i) (relating to requiring the sale of shares or obligations, or requiring the identified financial holding company to be acquired by or combine with another company). (ii) The action described in paragraph (B)(ii)(I) (relating to restricting transactions with affiliates). (D) SENIOR
EXECUTIVE OFFICERS COM-
PENSATION RESTRICTED.
(i) IN
GENERAL.The
identified fi-
nancial holding company shall not do any of the following without the prior written approval of the Board (I) Pay any bonus to any senior executive officer. (II) Provide compensation to any senior executive officer at a rate exceeding that officers average rate of
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53 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 compensation (excluding bonuses,
stock options, and profit-sharing) during the 12 calendar months preceding the calendar month in which the identified financial holding company became undercapitalized. (ii) FAILING
TO SUBMIT PLAN.The
Board shall not grant any approval under clause (i) with respect to an identified financial holding company that has failed to submit an acceptable capital restoration plan. (E) CONSULTATION
LATORS.Before WITH OTHER REGU-
the Board makes a deter-
mination under subparagraph (B)(vi) with respect to a subsidiary that is a broker, dealer, government securities broker, government securities dealer, investment company, or investment adviser, the Board shall consult with the Securities and Exchange Commission and, in the case of any other subsidiary which is subject to any financial responsibility or capital requirement, any other appropriate regulator of such subsidiary with respect to the proposed de-
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54 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 termination of the Board and actions pursuant to such determination. (8) MORE
STRINGENT TREATMENT BASED ON
OTHER SUPERVISORY CRITERIA.
(A) IN
GENERAL.If
the Board deter-
mines (after notice and an opportunity for hearing) that an identified financial holding company is in an unsafe or unsound condition or, pursuant to section 8(b)(8) of the Federal Deposit Insurance Act (12 U.S.C. 1818(b)(8)), deems the identified financial holding company to be engaging in an unsafe or unsound practice, the Board may (i) if the identified financial holding company is well capitalized, require the identified financial holding company to comply with one or more provisions of paragraphs (5) and (6), as if the institution were undercapitalized; or (ii) if the identified financial holding company is undercapitalized, take any one or more actions authorized under paragraph (7)(B) as if the identified financial holding company were significantly undercapitalized.
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55 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (B) CONTENTS
OF PLAN.A
plan that
may be required pursuant to subparagraph (A)(i) shall specify the steps that the identified financial holding company will take to correct the unsafe or unsound condition or practice. (9) MANDATORY
BANKRUPTCY PETITION FOR
CRITICALLY UNDERCAPITALIZED IDENTIFIED FINANCIAL COMPANIES.The
Board shall, not later than
90 days after an identified financial holding company becomes critically undercapitalized (A) require the identified financial holding company to file a petition for bankruptcy under section 301 of title 11, United States Code; or (B) file a petition for bankruptcy against the identified financial holding company under section 303 of title 11, United States Code. (10) IMPLEMENTATION.The Board shall prescribe such regulations, issue such orders, and take such other actions the Board determines to be necessary to carry out this section. (11) OTHER
AUTHORITY NOT AFFECTED.This
section does not limit any authority of the Board, any other Federal regulatory agency, or a State to take action in addition to (but not in derogation of) that required under this section.
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56 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (12) CONSULTATION.The Board and the Secretary of the Treasury shall consult with their foreign counterparties and through appropriate multilateral organizations to reach agreement to extend comprehensive and robust prudential supervision and regulation to all highly leveraged and substantially interconnected financial companies. (13) ADMINISTRATIVE
ORDERS. REVIEW OF DISMISSAL
(A) TIMELY
PETITION REQUIRED.A
di-
rector or senior executive officer dismissed pursuant to an order under paragraph
(7)(B)(v)(II) may obtain review of that order by filing a written petition for reinstatement with the Board not later than 10 days after receiving notice of the dismissal. (B) PROCEDURE. (i) HEARING
REQUIRED.The
Board
shall give the petitioner an opportunity to (I) submit written materials in support of the petition; and (II) appear, personally or
through counsel, before 1 or more
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57 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 members of the Board or designated employees of the Board. (ii) DEADLINE Board shall (I) schedule the hearing referred to in clause (i)(II) promptly after the petition is filed; and (II) hold the hearing not later than 30 days after the petition is filed, unless the petitioner requests that the hearing be held at a later time. (iii) DEADLINE
FOR DECISION.Not FOR HEARING.The
later than 60 days after the date of the hearing, the Board shall (I) by order, grant or deny the petition; (II) if the order is adverse to the petitioner, set forth the basis for the order; and (III) notify the petitioner of the order. (C) STANDARD
ORDERS.The FOR REVIEW OF DISMISSAL
petitioner shall bear the burden
of proving that the petitioners continued em-
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58 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 ployment would materially strengthen the identified financial holding companys ability (i) to become well capitalized, to the extent that the order is based on the identified financial holding companys capital level or failure to submit or implement a capital restoration plan; and (ii) to correct the unsafe or unsound condition or unsafe or unsound practice, to the extent that the order is based on paragraph (8)(A). (e) REPORTS REGARDING RAPID AND ORDERLY RESOLUTION AND
CREDIT EXPOSURE.
GENERAL.The
(1) IN
Board shall require
each identified financial holding company to report periodically to the Board on (A) its plan for rapid and orderly resolution in the event of severe financial distress; (B) the nature and extent to which the identified financial holding company has credit exposure to other significant financial companies; and (C) the nature and extent to which other significant financial companies have credit ex-
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59 1 2 3 4 5 6 7 8 9 10 11 posure to the identified financial holding company. (2) NO

LIMITING EFFECT ON RECEIVER OR
QUALIFIED RECEIVER.A
rapid resolution plan sub-
mitted in accordance with this subsection shall not be binding on a receiver or qualified receiver appointed under subtitle G, a bankruptcy court, or any other authority that is authorized or required to resolve the identified financial holding company or any of its subsidiaries or affiliates. (f) AVOIDING DUPLICATION.The Board shall take
12 any action the Board deems appropriate to avoid imposing 13 duplicative requirements under this chapter for identified 14 financial holding companies that are also bank holding 15 companies. 16 17 18 19 ed 20 21 22 23 24 25 (1) in subsection (h) (A) by striking or at the end of paragraph (1); and (B) by striking the period at the end of paragraph (2) and inserting ; or; and (2) by adding the following new subsection:
SEC. 1105. AUTHORITY TO FILE INVOLUNTARY PETITION FOR BANKRUPTCY.
Section 303 of title 11, United States Code is amend-
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60 1 (m) Notwithstanding subsections (a) and (b) of this
2 section, an involuntary case may be commenced by the 3 Board of Governors of the Federal Reserve System 4 against an identified financial holding company as defined 5 in section 2(t) of the Bank Holding Company Act of 1956. 6 Such involuntary case may be commenced on the ground 7 that the identified financial holding company is critically 8 undercapitalized as defined in section 6A(b) of the Bank 9 Holding Company Act of 1956.. 10 11 12 13 14
SEC. 1106. IDENTIFICATION OF ACTIVITIES OR PRACTICES FOR HEIGHTENED PRUDENTIAL STANDARDS AND SAFEGUARDS FOR FINANCIAL STA-
BILITY PURPOSES.
(a) IN GENERAL.The Council may subject a finan-
15 cial activity or practice to heightened prudential standards 16 and safeguards under section 1107 if the Council deter17 mines that the conduct of such activity or practice could 18 create or increase the risk of significant liquidity, credit, 19 or other problems spreading among financial institutions 20 or markets and thereby threaten the stability of the finan21 cial system. 22 23 24 25 (b) PERIODIC REVIEW
TIONS. OF
ACTIVITY IDENTIFICA-
(1) SUBMISSION
OF ASSESSMENT.The
Board
shall periodically submit a report to the Council con-
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61 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 taining an assessment of whether each activity or practice subjected to heightened prudential standards should continue to be subject to such standards. (2) REVIEW shall (A) review the assessment submitted pursuant to paragraph (1) and any information or recommendation submitted by members of the Council regarding whether an identified financial activity continues to merit heightened prudential standards; and (B) rescind the action subjecting an activity to heightened prudential supervision if the Council determines that the activity no longer meets the criteria in subsection (a). (c) PROCEDURE
FOR AND RECISION.The
Council
IDENTIFYING
OR
RESCINDING
18 IDENTIFICATION OF AN ACTIVITY OR PRACTICE. 19 20 21 22 23 24 (1) COUNCIL

AND BOARD COORDINATION.The
Council shall inform the Board if the Council is considering whether to identify or cease to identify an activity under this section. (2) NOTICE
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62 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (A) IN
GENERAL.The
Board shall, in an
executive capacity on behalf of the Council, provide notice to financial companies that the Council is considering whether to identify an activity or practice for heightened prudential regulation, and shall provide a financial company engaged in such activity or practice 30 days to submit written materials to inform the Councils decision. The Council shall decide, and the Board shall provide notice of the Councils decision, within 60 days of the due date for such written materials. (B) EMERGENCY
EXCEPTION.The
Coun-
cil may waive or modify the requirements of subparagraph (A) if the Council determines that such waiver or modification is necessary or appropriate to prevent or mitigate threats posed by an activity to financial stability. The Board shall, in an executive capacity on behalf of the Council, provide notice of such waiver or modification to financial companies as soon as practicable, which shall be no later than 24 hours after the waiver or modification. (3) FORM
OF DECISION.The
Board shall pro-
vide all notices required under this subsection by
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63 1 2 3 posting a notice on the Boards Web site and publishing a notice in the Federal Register. (d) EFFECT
OF
IDENTIFICATION.The Board shall,
4 in accordance with section 1107, recommend to the appro5 priate primary financial regulatory agencies specific 6 heightened prudential standards to be applied to an activ7 ity or practice that the Council or the Board identifies 8 under this section. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
SEC. 1107. REGULATION OF IDENTIFIED ACTIVITIES FOR FINANCIAL STABILITY PURPOSES.
(a) LIMITATIONS ON IDENTIFIED FINANCIAL ACTIVITIES AND
PRACTICES. (1) RECOMMENDATIONS.To mitigate the risks
to United States financial stability and the United States economy posed by financial activities and practices that the Council or the Board identifies for heightened prudential scrutiny in accordance with section 1103, the Board shall recommend prudential standards to the appropriate primary financial regulatory agencies to apply to such identified activities and practices. (2) CRITERIA.The actions recommended
under paragraph (1)
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64 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (A) shall be designed to maximize financial stability, taking costs to long-term financial and 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 altogether. (b) IMPLEMENTATION
ARDS. OF
RECOMMENDED STAND-
(1) ROLE
OF PRIMARY FINANCIAL REGULATORY
AGENCY.Each
primary financial regulatory agency
is authorized to impose, require reports regarding, examine for compliance with, and enforce standards in accordance with this section with respect to those entities described in section 2(6) for which it is the primary financial regulatory agency. This authority is in addition to and does not limit any other authority of the primary financial regulatory agencies. 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 primary financial regu-
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65 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 latory agencys jurisdiction over the entity as if the agency action were taken under those statutes. (2) IMPOSITION
OF STANDARDS.Standards
imposed under this subsection shall be the standards recommended by the Board in accordance with subsection (a) or any other similar standards that the Board deems acceptable after consultation between the Board and the primary financial regulatory agency. (3) FAILURE
TO ADOPT STANDARDS; NOTICE
TO COUNCIL AND BOARD.If
a primary financial
regulatory agency fails to implement the prudential standards recommended by the Board or other similar standards that are acceptable to the Board within 60 days of the Boards recommendation, the primary financial regulatory agency shall justify the failure of such agency to act in writing to the Council and the Board within that same time period. (4) BACKUP (A) IN
AUTHORITY OF THE BOARD. GENERAL.When
notified that a
primary financial regulatory agency has failed to impose heightened prudential standards recommended by the Board for financial stability purposes under this section, the Board is authorized to directly impose, require reports re-
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66 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 garding, examine for compliance with, and enforce such heightened prudential standards under this section with respect to entities described in section 2(6) for which the primary financial regulatory agency ordinarily is responsible. (B) LIMITATION
THORITY.The ON BOARD BACKUP AU-
Boards standard-imposition,
report-related, examination, and enforcement activities under this subsection shall be limited to heightened prudential standards imposed under this section and shall be done in coordination with the primary financial regulatory agency.
SEC. 1108. EFFECT OF RESCISSION OF IDENTIFICATION.
(a) NOTICE.When the Council or the Board deter-
17 mines that a company or activity no longer is identified 18 for heightened prudential scrutiny, the Board shall inform 19 the relevant primary financial regulatory agency or agen20 cies (if different from the Board) of that finding. 21 22 (b) DETERMINATION
LATORY OF
PRIMARY FINANCIAL REGU-
AGENCY
TO
CONTINUE.A primary financial
23 regulatory agency that has imposed heightened prudential 24 standards for financial stability purposes under this sub-
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67 1 title shall determine whether standards that it has im2 posed under this subtitle should remain in effect. 3 4
SEC. 1109. EMERGENCY FINANCIAL STABILIZATION.
(a) IN GENERAL.Upon the written approval of the
5 Board of Governors of the Federal Reserve System (which 6 approval shall be made upon a vote of not less than two7 thirds of the members of such Board then serving) and 8 the Board of Directors of the Corporation (which approval 9 shall be made upon a vote of not less than two-thirds of 10 the members of such Board then serving), and with the 11 written consent of the Secretary of the Treasury (after 12 consulting with the President), the Corporation may ex13 tend credit to or guarantee obligations of solvent insured 14 depository institutions or other solvent companies that are 15 predominantly engaged in activities that are financial in 16 nature, if necessary to prevent financial instability during 17 times of severe economic distress, provided that a credit 18 extension or guarantee of obligations under this section 19 shall not include provision of equity in any form. 20 (b) POLICIES AND PROCEDURES.Prior to exercising
21 any authority under this section, the Corporation shall es22 tablish policies and procedures governing the extension of 23 credit and the issuance of guarantees. The terms and con24 ditions of any extensions of credit or guarantees issued 25 shall be established by the Corporation with the approval
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68 1 of the Secretary of the Treasury and the Board of Gov2 ernors of the Federal Reserve System. 3 (c) FUNDING.There shall be available to the Cor-
4 poration to carry out this section amounts in the Treasury 5 not otherwise appropriated, including for the payment of 6 reasonable administrative expenses. Notwithstanding sec7 tion 7(d) of the Federal Deposit Insurance Act (12 U.S.C. 8 1817(d)), such amounts shall be subject to apportionment 9 for the purposes of chapter 15 of title 31, United States 10 Code. Amounts received by the Corporation from assess11 ments imposed under subsection (d), extensions of credit, 12 and guarantees, including payments of principal, interest, 13 and guarantee fees, shall be covered into the Treasury as 14 miscellaneous receipts. 15 (d) RECOUPMENT; ASSESSMENT.Any losses in-
16 curred by the Corporation pursuant to subsection (a) shall 17 be recovered from Corporation assessments on large finan18 cial companies in the manner provided in section 1609(o) 19 of the Resolution Authority for Large, Interconnected Fi20 nancial Companies Act of 2009. 21 (e) DEFINITIONS.For purposes of this section, the
22 following definitions apply: 23 24 25 (1) ACTIVITIES

TURE.The THAT ARE FINANCIAL IN NA-
term activities that are financial in
nature means activities that are determined to be
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69 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 financial in nature under section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)) and activities that are identified for heightened prudential standards under section 1106 of this title. (2) 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. (3) CORPORATION.The term Corporation means the Federal Deposit Insurance Corporation. (4) INSURED
DEPOSITORY INSTITUTION.The
term insured depository institution shall have the same meaning as in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813). (5) SOLVENT.The term solvent means assets are more than the obligations to creditors.
SEC. 1110. EXAMINATIONS AND ENFORCEMENT ACTIONS FOR INSURANCE AND RESOLUTIONS PURPOSES.
(a) EXAMINATIONS
TIONS
FOR
INSURANCE
AND
RESOLU-
PURPOSES.Section 10(b)(3) of the Federal De-
22 posit Insurance Act (12 U.S.C. 1820(b)(3)) is amended 23 by striking beginning whenever the Board of Directors 24 determines through the period and inserting or identi25 fied financial holding company (as defined in section 2(5))
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70 1 whenever the Board of Directors determines a special ex2 amination of any such depository institution is necessary 3 to determine the condition of such depository institution 4 for insurance or such identified financial holding company 5 for resolution purposes.. 6 (b) ENFORCEMENT AUTHORITY.Section 8(t) of the
7 Federal Deposit Insurance Act (12 U.S.C. 1818(t)) is 8 amended 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (1) at the end of subparagraph (B) by striking or; (2) at the end of subparagraph (C) by striking the period and inserting ; or; (3) by inserting new subparagraph (D), as follows: (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; and (4) by adding new paragraph (6) at the end as follows (6) For purposes of this subsection: (A) The Corporation shall have the same powers with respect to a depository institution holding company and its affiliates as the appro-
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71 1 2 3 4 5 6 7 8 9 priate 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.
SEC. 1111. RULE OF CONSTRUCTION.
The authorities granted to agencies under this sub-
10 title are in addition to any rulemaking, report-related, ex11 amination, enforcement, or other authority that such 12 agencies may have under other law and in no way shall 13 be construed to limit such other authority, except that any 14 standards imposed for financial stability purposes under 15 this subtitle shall supersede any conflicting less stringent 16 requirements of the primary financial regulatory agency 17 but only the extent of the conflict. 18 19 20 21 22
Subtitle CImprovements to Supervision and Regulation of Federal Depository Institutions

SEC. 1201. DEFINITIONS.
For purposes of this subtitle, the following definitions
23 shall apply:
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72 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (1) BOARD
OF GOVERNORS.The
term Board
of Governors means the Board of Governors of the Federal Reserve System. (2) CORPORATION.The term Corporation means the Federal Deposit Insurance Corporation. (3) OFFICE
CURRENCY.The OF THE COMPTROLLER OF THE
term Office of the Comptroller of
the Currency means the office established by section 324 of the Revised Statutes (12 U.S.C. 1). (4) OFFICE
OF THRIFT SUPERVISION.The
term Office of Thrift Supervision means the office established by section 3 of the Home Owners Loan Act (12 U.S.C. 1462a). (5) SECRETARY.The term Secretary means the Secretary of the Treasury. (6) TRANSFER
DATE.The
term transfer
date has the meaning provided in section1205. (7) CERTAIN

OTHER TERMS.The
terms affil-
iate, bank holding company, control (when used with respect to a depository institution), depository institution, Federal banking agency, Federal savings association, including, insured branch, insured depository institution, savings association, State savings association, and sub-
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73 1 2 3 4 5 sidiary have the same meanings as in section 3 of the Federal Deposit Insurance Act.
SEC. 1202. AMENDMENTS TO THE HOME OWNERS LOAN ACT RELATING TO TRANSFER OF FUNCTIONS.
(a) AMENDMENTS
TO
SECTION 2.Section 2 of the
6 Home Owners Loan Act (12 U.S.C. 1462) is amended 7 by amending paragraph (1) to read as follows: 8 9 10 11 (1) BOARD
OF GOVERNORS.The
term Board
of Governors means the Board of Governors of the Federal Reserve System.. (b) AMENDMENTS
TO
12 Home Owners Loan Act (12 U.S.C. 1462a) is amended 13 14 15 16 (1) by striking subsection (a) and inserting the following new subsection: (a) ESTABLISHMENT
PERVISION.To OF
DIVISION
OF
THRIFT SU-
carry out the purposes of this Act, there
17 is hereby established the Division of Thrift Supervision, 18 which shall be a division within the Office of the Comp19 troller of the Currency.; 20 21 22 23 24 (2) in subsection (b) (A) by striking paragraph (1) and inserting the following new paragraph: (1) IN
GENERAL.The
Division of Thrift Su-
pervision shall be headed by a Deputy Comptroller
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74 1 2 3 4 5 6 7 8 9 10 of the Currency who shall be subject to the general oversight of the Comptroller of the Currency.; (B) in paragraph (2), by striking Director and inserting Comptroller of the Currency; and (C) by striking paragraph (3) and (4); (3) by striking subsections (c), (d), and (e) and inserting the following new subsection: (c) POWERS
RENCY.The OF THE
COMPTROLLER
OF THE
CUR-
Comptroller of the Currency shall have all
11 the powers, duties, and functions transferred by the Fi12 nancial Stability Improvement Act of 2009 to the Comp13 troller of the Currency to carry out this Act.; 14 15 16 17 18 19 20 21 22 23 24 (4) by redesignating subsections (f) and (i) as subsections (d) and (e), respectively; (5) in subsection (d) (as so redesignated), by striking Director each place such term appears and inserting Comptroller of the Currency; (6) by striking subsections (g), (h), and (j); and (7) in subsection (e) (as so redesignated), by striking compensation of the Director and other employees of the Office and all other expenses thereof and inserting expenses incurred by the Comptroller of the Currency in carrying out this Act.
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75 1 (c) AMENDMENTS
TO
2 Home Owners Loan Act (12 U.S.C. 1463) is amended 3 by striking Director every time it appears and inserting 4 Comptroller of the Currency. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 (d) AMENDMENTS TO SECTION 5. (1) UNIVERSAL.Section 5 of the Home Owners Loan Act (12 U.S.C. 1464) is amended (A) by striking Director and Director of the Office of Thrift Supervision each place such term appears and inserting Comptroller of the Currency; and (B) by striking Directors each place such term appears and inserting Comptroller of the Currencys. (2) SPECIFIC
PROVISIONS.
(A) Section 5(d)(2)(E) of the Home Owners Loan Act is amended by striking or the Resolution Trust Corporation, as appropriate, each place such term appears. (B) Section 5(d)(3)(B) of the Home Owners Loan Act is amended by striking or the Resolution Trust Corporation. (e) AMENDMENTS
TO
SECTIONS 8
AND
9.Sections
24 8 and 9 of the Home Owners Loan Act (12 U.S.C. 25 11466a, 1467) are each amended by striking Director
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76 1 each place such term appears and inserting Comptroller 2 of the Currency. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (f) TECHNICAL
AND
CONFORMING AMENDMENTS.
(1) DEFINITIONS.Section 2 of the Home Owners Loan Act (12 U.S.C. 1462) is amended (A) by striking paragraph (1) and (3); and (B) by redesignating paragraphs (2), (4), (5), (6), (7), (8) and (9) as paragraphs (1), (2), (3), (4), (5), (6), (7), and (8), respectively. (2) SECTION 3. (A) The heading for section 3 of the Home Owners Loan Act is amended by striking DIRECTOR OF THE OFFICE OF THRIFT SUPERVISION
and inserting DIVISION
OF
THRIFT SUPERVISION.
(B) The heading for subsection (e) of section (3) of the Home Owners Loan Act is amended by striking DIRECTOR and inserting COMPTROLLER (3) SECTION
OF THE
CURRENCY.
5.The
heading for paragraph
(2)(E)(ii) of section 5(d) of the Home Owners Loan Act and the heading for paragraph (3)(B) of such section are each amended by striking OR RTC. (g) CLERICAL AMENDMENT.The table of contents
25 section for the Home Owners Loan Act is amended by
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77 1 striking the item relating to section 3 and inserting the 2 following new item:
Sec. 3. Division of Thrift Supervision..
3 4
SEC. 1203. AMENDMENTS TO THE REVISED STATUTES.
(a) AMENDMENT
TO
SECTION 324.Section 324 of
5 the Revised Statutes of the United States (12 U.S.C. 1) 6 is amended to read as follows: 7 8
SEC. 324. COMPTROLLER OF THE CURRENCY.
There shall be in the Department of the Treasury
9 a bureau, the chief officer of which bureau shall be called 10 the Comptroller of the Currency, and shall perform the 11 duties of the Comptroller of the Currency under the gen12 eral direction of the Secretary of the Treasury. The Comp13 troller of the Currency shall have the same authority over 14 matters as were vested in the Director of the Office of 15 Thrift Supervision or the Office of Thrift Supervision on 16 the day before the date of enactment of the Financial Sta17 bility Improvement Act of 2009. The Secretary of the 18 Treasury may not delay or prevent the issuance of any 19 rule or the promulgation of any regulation by the Comp20 troller of the Currency.. 21 (b) AMENDMENTS
TO
22 the Revised Statutes of the United States (12 U.S.C. 4) 23 is amended to read as follows:
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78 1 2
SEC. 327 DEPUTY COMPTROLLERS.
(a) APPOINTMENT.The Secretary of the Treasury
3 shall appoint no more than 5 Deputy Comptrollers of the 4 Currency 5 6 7 8 9 (1) 1 of whom shall be designated First Deputy Comptroller of the Currency; and (2) 1 of whom shall be designated the Deputy Comptroller of the Division of Thrift Supervision. (b) PAY.The Secretary of the Treasury shall fix
10 the compensation of the Deputy Comptrollers of the Cur11 rency and provide such other benefits as the Secretary 12 may determine to be appropriate. 13 (c) OATH
OF
OFFICE; DUTIES.Each Deputy
14 Comptroller shall take the oath of office and shall perform 15 such duties as the Comptroller of the Currency shall di16 rect. 17 (d) SERVICE
AS
ACTING COMPTROLLER.During a
18 vacancy in the office or during the absence or disability 19 of the Comptroller, each Deputy Comptroller shall possess 20 the power and perform the duties attached by law to the 21 Office of the Comptroller under such order of succession 22 following the First Deputy Comptroller as the Comptroller 23 shall direct.. 24 (c) AMENDMENT
TO
25 the Revised Statutes of the United States (12 U.S.C. 11)
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79 1 is amended by inserting or any Federal savings associa2 tion before the period at the end. 3 (d) AMENDMENT
TO
SECTION 481.The fourth sen-
4 tence of the second undesignated paragraph of Section 5 5240 of the Revised Statutes of the United States (12 6 U.S.C. 481) is amended by striking Secretary of the 7 Treasury; and all that follows through the end of the sen8 tence, and inserting Secretary of the Treasury; the em9 ployment and compensation of examiners, chief examiners, 10 reviewing examiners, assistant examiners, and of the other 11 employees of the office of the Comptroller of the Currency 12 whose compensation is and shall be paid from assessments 13 on banks or affiliates thereof or from other fees or charges 14 imposed pursuant to this subchapter shall be set and ad15 justed pursuant to chapter 71 of title five, United States 16 Code and without regard to the provisions of other laws 17 applicable to officers or employees of the United States. 18 (e) AMENDMENT
TO
SECTION 482.The first sen-
19 tence in the first undesignated paragraph of Section 5240 20 of the Revised Statutes of the United States (12 U.S.C. 21 482) is amended by inserting pursuant to chapter 71 of 22 title five, United States Code, after shall,. 23 24 25
SEC. 1204. POWER AND DUTIES TRANSFERRED.
(a) DIRECTOR
VISION.
OF THE
OFFICE
OF
THRIFT SUPER-
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80 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (1) TRANSFER
OF FUNCTIONS.Except
as oth-
erwise provided in this subtitle, all functions of the Director of the Office of Thrift Supervision are transferred to the Office of the Comptroller of the Currency. (2) COMPTROLLERS
AUTHORITY.Except
as
otherwise provided in this subtitle, the Comptroller of the Currency shall succeed to all powers, authorities, rights, and duties that were vested in the Director of the Office of Thrift Supervision under Federal law, including the Home Owners Loan Act, on the day before the transfer date. (3) FUNCTIONS
RELATING TO SUPERVISION OF
STATE SAVINGS ASSOCIATIONS.
(A) TRANSFER
OF FUNCTIONS.All
func-
tions of the Director of the Office of Thrift Supervision relating to the supervision and regulation of State savings associations are transferred to the Corporation. (B) CORPORATIONS
AUTHORITY.The
Corporation shall succeed to all powers, authorities, rights, and duties that were vested in the Director of the Office of Thrift Supervision under Federal law, including the Home Owners Loan Act, on the day before the transfer date,
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81 1 2 3 relating to the supervision and regulation of State savings associations. (b) APPROPRIATE FEDERAL BANKING AGENCY.
4 Section 3 of the Federal Deposit Insurance Act (12 U.S.C. 5 1813) is amended in subsection (q) 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
TION
(1) by amending paragraph (1) to read as follows: (1) the Comptroller of the Currency in the case of any national bank, Federal savings association or any Federal branch or agency of a foreign bank;; and (2) by amending paragraph (3) to read as follows: (3) the Federal Deposit Insurance Corporation in the case of a State nonmember insured bank, a State savings association or a foreign bank having an insured branch.; and (3) by striking paragraph (4). (c) TRANSFER
OF
CONSUMER FINANCIAL PROTEC-
FUNCTIONS.Nothing in subsection (a) or (b) shall
21 affect any transfer of consumer financial protection func22 tions of the Comptroller of the Currency and the Director 23 of the Office of Thrift Supervision to the Consumer Finan24 cial Protection Agency as provided in the Consumer Fi25 nancial Protection Agency Act of 2009.
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82 1 (d) EFFECTIVE DATE.Subsections (a) and (b) shall
2 become effective on the transfer date. 3 4

SEC. 1205. TRANSFER DATE.
(a) IN GENERAL.Except as provided in subsection
5 (b), the date for the transfer of functions to the Office 6 of the Comptroller of the Currency and the Corporation 7 under section 1204 shall be 1 year after the date of enact8 ment of this Act. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (b) EXTENSION PERMITTED. (1) NOTICE
REQUIRED.The
Secretary, in con-
sultation with the Comptroller of the Currency and the Director of the Office of Thrift Supervision, may designate a calendar date for the transfer of functions of the Office of Thrift Supervision to the Office of the Comptroller of the Currency, and the Corporation under section 1204 that is later than 1 year after the date of enactment of this Act if the Secretary (A) transmits to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives (i) a written determination that orderly implementation of this title is not
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83 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 feasible on the date that is 1 year after the date of enactment of this Act; (ii) an explanation of why an extension is necessary for the orderly implementation of this title; and (iii) a description of the steps that will be taken to effect an orderly and timely implementation of this title within the extended time period; and (B) publishes notice of that designated later date in the Federal Register. (2) EXTENSION
LIMITED.In
no case shall any
date designated under paragraph (1) be later than 18 months after the date of enactment of this Act. (3) EFFECT
DATE.If ON REFERENCES TO
TRANSFER
the Secretary takes the actions provided
in paragraph (1) for designating a date for the transfer of functions to the Office of the Comptroller of the Currency, and the Corporation under section 1204, references in this title to transfer date shall mean the date designated by the Secretary.
SEC. 1206. OFFICE OF THRIFT SUPERVISION ABOLISHED.
Effective 90 days after the transfer date, the position
24 of Director of the Office of Thrift Supervision and the Of25 fice of Thrift Supervision are abolished.
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84 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
SEC. 1207. SAVINGS PROVISIONS.
(a) OFFICE OF THRIFT SUPERVISION. (1) EXISTING

RIGHTS, DUTIES, AND OBLIGA-
TIONS NOT AFFECTED.Sections
1204(a)(1) and
1206 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
Act 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 Director of the Office of Thrift Supervision transferred to the Comptroller of the Currency by this title, the Comptroller of the Currency or the Office of the Comptroller of the Currency shall be substituted for the Director of the Office of Thrift Supervision or the Office of Thrift Supervision, as the case may be, as a party to the action or proceeding as of the transfer date; or (B) for any action or proceeding arising out of a function of the Director of the Office
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85 1 2 3 4 5 6 7 8 of Thrift Supervision transferred to the Corporation by this title, the Chairman of the Corporation shall be substituted for the Director of the Office of Thrift Supervision as a party to the action or proceeding as of the transfer date. (b) CONTINUATION OF EXISTING OTS ORDERS, RESOLUTIONS, TIONS,
DETERMINATIONS, AGREEMENTS, REGULAorders, resolutions, determinations,
ETC.All
9 agreements, and regulations, interpretative rules, other in10 terpretations, guidelines, procedures, and other advisory 11 materials, that have been issued, made, prescribed, or al12 lowed to become effective by the Office of Thrift Super13 vision, or by a court of competent jurisdiction, in the per14 formance of functions that are transferred by this title and 15 that are in effect on the day before the transfer date, shall 16 continue in effect according to the terms of those orders, 17 resolutions, determinations, agreements, and regulations, 18 interpretative rules, other interpretations, guidelines, pro19 cedures, and other advisory materials, and shall be en20 forceable by or against 21 22 23 24 25 (1) the Office of the Comptroller of the Currency, in the case of a function of the Director of the Office of Thrift Supervision transferred to the Comptroller of the Currency, until modified, terminated, set aside, or superseded in accordance with
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86 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 applicable law by the Office of the Comptroller of the Currency, by any court of competent jurisdiction, or by operation of law; or (2) the Corporation, in the case of a function of 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. (d) IDENTIFICATION
UED. OF
REGULATIONS CONTIN-
(1) BY
OFFICE OF THE COMPTROLLER OF THE
CURRENCY.Not
later than the transfer date, the
Comptroller of the Currency shall (A) after consultation with the Chairperson of the Corporation, identify the regulations continued under subsection (c) that will be enforced by the Office of the Comptroller of the Currency; and (B) publish a list of such regulations in the Federal Register. (2) 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
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87 1 2 3 4 5 regulations continued under subsection (c) that will be enforced by the Corporation; and (B) publish a list of such regulations in the Federal Register. (e) STATUS
OF
REGULATIONS PROPOSED
OR
NOT
6 YET EFFECTIVE. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 (1) PROPOSED

REGULATIONS.Any
proposed
regulation of the Office of Thrift Supervision, which that agency, in performing functions transferred by this title, has proposed before the transfer date but has not published as a final regulation before that date, shall be deemed to be a proposed regulation of the Office of the Comptroller of the Currency, or the Corporation, as appropriate, according to its terms. (2) REGULATIONS
NOT YET EFFECTIVE.Any
interim or final regulation of the Office of Thrift Supervision, which that agency, 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 Corporation, as appropriate, according to its terms.
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88 1 2
SEC. 1208. REGULATIONS AND ORDERS.
In addition to any powers transferred to the Comp-
3 troller of the Currency by this title, the Comptroller of 4 the Currency may prescribe such regulations and issue 5 such orders as the Comptroller of the Currency determines 6 to be appropriate to carry out this title and the powers 7 and duties transferred to the Comptroller of the Currency 8 by this title. 9 10
SEC. 1209. COORDINATION OF TRANSITION ACTIVITIES.
Before the transfer date, the Comptroller of the Cur-
11 rency shall 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (1) consult and cooperate with the Office of Thrift Supervision to facilitate the orderly transfer of functions to the Comptroller of the Currency; (2) determine and redetermine, 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) what personnel are appropriate to facilitate the orderly transfer of functions by this title; and
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89 1 2 3 4 5 6 7 8 9 10 11 (C) what property and administrative services are necessary to support the Office of the Comptroller of the Currency 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.
SEC. 1210. INTERIM RESPONSIBILITIES OF OFFICE OF THE COMPTROLLER OF THE CURRENCY AND OFFICE OF THRIFT SUPERVISION.
(a) IN GENERAL.When requested by the Comp-
12 troller of the Currency to do so before the transfer date, 13 the Office of Thrift Supervision shall 14 15 16 17 18 19 20 21 22 23 24 (1) pay to the Comptroller of the Currency, 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 that the Comptroller of the Currency determines to be necessary under section 1209(2)(A); (2) detail to the Office of the Comptroller of the Currency such personnel as the Comptroller of the Currency determines to be appropriate under section 1209(2)(B); and
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90 1 2 3 4 5 6 7 (3) make available to the Office of the Comptroller of the Currency such property and provide the Office of the Comptroller of the Currency such administrative services as the Comptroller of the Currency determines to be necessary under section 1209(2)(C). (b) NOTICE REQUIRED.The Comptroller of the
8 Currency shall give the Office of Thrift Supervision rea9 sonable prior notice of any request that the Office of the 10 Comptroller of the Currency intends to make under sub11 section (a). 12 13 14 15 16 17 18 19 20 21 22 23
SEC. 1211. EMPLOYEES TRANSFERRED.
(a) IN GENERAL. (1) OTS

EMPLOYEES. GENERAL.All
(A) IN
employees of the
Office of Thrift Supervision shall be transferred to either the Comptroller of the Currency or the Corporation for employment. (B) ALLOCATING
EMPLOYEES FOR TRANS-
FER TO RECEIVING AGENCIES.The
Director of
the Office of Thrift Supervision, the Comptroller of the Currency, and the Chairperson of the Corporation shall
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91 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (i) jointly determine the number of employees of the Office of Thrift Supervision necessary to perform or support (I) the functions of the Office of Thrift Supervision that are transferred to the Office of the Comptroller of the Currency by this title; and (II) the functions of the Office of Thrift Supervision that are transferred to the Corporation by this title; (iii) consistent with the numbers determined under clause (ii), jointly identify employees of the Office of Thrift Supervision for transfer to the Office of the Comptroller of the Currency or the Corporation in a manner that the Director of the Office of Thrift Supervision, the Comptroller of the Currency, and the Chairperson of the Corporation, in their discretion, deem equitable. (2) TRANSFER
OF EMPLOYEES PERFORMING
CONSUMER FINANCIAL PROTECTION FUNCTIONS.
Nothing in paragraph (1) shall affect the transfer of employees performing or supporting consumer financial protection functions of the Comptroller of the
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92 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Currency and the Director of the Office of Thrift Supervision to the Consumer Financial Protection Agency as provided in the Consumer Financial Protection Agency Act of 2009. (3) APPOINTMENT
AUTHORITY FOR EXCEPTED
SERVICE TRANSFERRED.
(A) IN
GENERAL.In
the case of employ-
ees occupying positions in the excepted 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.
The Office of the Comptroller of the Currency and the Corporation may decline to accept 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. (b) TIMING
MENTS.Each OF
TRANSFERS
AND
POSITION ASSIGN-
employee to be transferred under this sec-
24 tion shall
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93 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 (1) be transferred not later than 90 days after the transfer date; and (2) receive notice of his or her position assignment not later than 120 days after the effective date of his or her transfer. (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 ACT.If
any provision
of this title conflicts with any protection provided to transferred employees under section 3503 of title 5, United States Code, the provisions of this title shall control. (d) EMPLOYEES STATUS
AND
ELIGIBILITY.The
17 transfer of functions and employees under this title, and 18 the abolition of the Office of Thrift Supervision, shall not 19 affect the status of the transferred employees as employ20 ees of an agency of the United States under any provision 21 of law. 22 (e) EQUAL STATUS
AND
TENURE POSITIONS.Each
23 employee transferred from the Office of Thrift Supervision 24 shall be placed in a position at either the Office of the 25 Comptroller of the Currency or the Corporation with the
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94 1 same status and tenure as he or she held on the day before 2 the transfer date. 3 4 (f) NO ADDITIONAL CERTIFICATION REQUIREMENTS.Examiners
transferred to the Office of the
5 Comptroller of the Currency or the Corporation shall not 6 be subject to any additional certification requirements be7 fore being placed in a comparable examiners position at 8 the Office of the Comptroller of the Currency or the Cor9 poration examining the same types of institutions as they 10 examined before they were transferred. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (g) PERSONNEL ACTIONS LIMITED. (1) 1-YEAR
PROTECTION.Except
as provided
in paragraph (2), each employee transferred from the Office of Thrift Supervision holding a permanent position on the day before the transfer date shall not, during the 1-year period beginning on the transfer date, be involuntarily separated, or involuntarily reassigned outside his or her locality pay area as defined by the Office of Personnel Management. (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; or
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95 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (B) terminate an appointment to a position excepted from the competitive service because of its confidential policy-making, policy-deter-
mining, or policy-advocating character. (h) PAY. (1) 1-YEAR

PROTECTION.Except
as provided
in paragraph (2), each employee transferred from the Office of Thrift Supervision shall, during the 1year period beginning on the transfer date, receive pay at a rate not less than the basic rate of pay (including any geographic differential) that the employee received during the 1-year period immediately before the transfer. (2) EXCEPTIONS.Paragraph (1) does not limit the right of the Office of the Comptroller of the Currency or the Corporation to reduce a transferred employees rate of basic pay (A) for cause; (B) for unacceptable performance; or (C) with the employees consent. (3) PROTECTION
ONLY WHILE EMPLOYED.
Paragraph (1) applies to a transferred employee only while that employee remains employed by the Office of the Comptroller of the Currency or the Corporation.
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96 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (4) PAY
INCREASES PERMITTED.Paragraph
(1) does not limit the authority of the Office of the Comptroller of the Currency or the Corporation to increase a transferred employees pay. (i) BENEFITS. (1) RETIREMENT
EMPLOYEES. BENEFITS FOR TRANSFERRED
(A) IN
GENERAL. OF EXISTING RE-
(i) CONTINUATION
TIREMENT PLAN.Each
employee trans-
ferred from the Office of Thrift Supervision may remain enrolled in his or her existing retirement plan or plans as long as he or she remains employed by the Office of the Comptroller of the Currency. (ii) EMPLOYERS
CONTRIBUTION.
The Office of the Comptroller of the Currency or the Corporation shall pay any employer contributions to the existing retirement plan of each employee transferred from the Office of Thrift Supervision as required under that plan. (B) DEFINITION.For purposes of this paragraph, the term existing retirement plan means, with respect to any employee trans-
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97 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ferred under this section, the particular retirement plan (including the Financial Institutions Retirement Fund) and any associated thrift savings plan of the agency from which the employee was transferred, which the employee was enrolled in on the day before the transfer date. (2) BENEFITS
EFITS. OTHER THAN RETIREMENT BEN-
(A) DURING
1ST YEAR. PLANS CONTINUE.
(i) EXISTING
Each transferred employee may, for 1 year after the transfer date, retain membership in any other employee benefit program of the Office of Thrift Supervision, including a dental, vision, long term care, or life insurance program, to which the employee belonged on the day before the transfer date. (ii) EMPLOYERS
CONTRIBUTION.
The Office of the Comptroller of the Currency or the Corporation shall pay any employer cost in continuing to extend coverage in the benefit program to the employee as required under that program or negotiated agreements.
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98 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (B) DENTAL,
VISION, OR LIFE INSURANCE
AFTER 1ST YEAR.If,
after the 1-year period
beginning on the transfer date, the Office of the Comptroller of the Currency or the Corporation decides not to continue participation in any dental, vision, or life insurance program of the Office of Thrift Supervision, an employee transferred from the Office of Thrift Supervision pursuant to this title who is a member of such a program may, before the decision of the Office of the Comptroller of the Currency or the Corporation takes effect, elect to enroll, without regard to any regularly scheduled open season, in (i) the enhanced dental benefits program established by chapter 89A of title 5, United States Code; (ii) the enhanced vision benefits established by chapter 89B of title 5, United States Code; and (iii) the Federal Employees Group Life Insurance Program established by chapter 87 of title 5, United States Code, without regard to any requirement of insurability.
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99 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (C) LONG
1ST YEAR.If, TERM CARE INSURANCE AFTER
after the 1-year period begin-
ning on the transfer date, the Office of the Comptroller of the Currency or the Corporation decides not to continue participation in any long term care insurance program of the Office of Thrift Supervision, an employee transferred from the Office of Thrift Supervision pursuant to this title who is a member of such a program may, before the decision of the Office of the Comptroller of the Currency or the Corporation takes effect, elect to apply for coverage under the Federal Long Term Care Insurance Program established by chapter 90 of title 5, United States Code, under the underwriting requirements applicable to a new active workforce member (as defined in Part 875, title 5, Code of Federal Regulations). (D) EMPLOYEES (i) IN
CONTRIBUTION.
GENERAL.Subject
to clause
(ii), an individual enrolled in the Federal Employees Health Benefits program under this subparagraph shall pay any employee contribution required by the plan.
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100 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (ii) COST

DIFFERENTIAL.The
dif-
ference in costs between the benefits that the Office of Thrift Supervision is providing on the date of enactment of this Act and the benefits provided by this section shall be paid by the Comptroller of the Currency or the Corporation. (iii) FUNDS
TRANSFER.The
Office
of the Comptroller of the Currency or the Corporation 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 Office of the Comptroller of the Currency or the Corporation 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 (i). (E) SPECIAL
PROVISIONS TO ENSURE CON-
TINUATION OF LIFE INSURANCE BENEFITS.
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101 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (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 the Office of Thrift Supervision on the day before the transfer date shall be eligible for coverage by a life 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 Office of the Comptroller of the Currency or the Corporation, without regard to any regularly scheduled open season and requirement of insurability. (ii) EMPLOYEES (I) IN
CONTRIBUTION.
GENERAL.Subject
to
subclause (II), an individual enrolled in a life insurance plan under this clause shall pay any employee contribution required by the plan. (II) COST
DIFFERENTIAL.The
difference in costs between the benefits that the Office of Thrift Supervision is providing on the date of enactment of this Act and the benefits
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102 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 provided by this section shall be paid by the Comptroller of the Currency or the Corporation. (III) FUNDS
TRANSFER.The
Office of the Comptroller of the Currency or the Corporation 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 Office of the Comptroller of the Currency or the Corporation 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 subclause (I). (IV) CREDIT
FOR TIME EN-
ROLLED IN OTHER PLANS.For
em-
ployees transferred under this section, enrollment in a life insurance plan administered by the Office of the Comp-
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103 1 2 3 4 5 6 7 8 9 10 troller of the Currency, the Office of Thrift Supervision, or the Corporation 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) EQUITABLE TREATMENT.In administering the
11 provisions of this section, the Office of the Comptroller 12 of the Currency and the Corporation 13 14 15 16 17 18 19 20 21 22 23 24 25 (1) shall take no action that would unfairly disadvantage transferred employees relative to other employees of the Office of the Comptroller of the Currency based on their prior employment by the Office of Thrift Supervision; (2) may take such action as is appropriate in individual cases so that employees transferred under this section receive equitable treatment, with respect to those employees 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.
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104 1 2
SEC. 1212. PROPERTY TRANSFERRED.
(a) IN GENERAL.Not later than 90 days after the
3 transfer date, all property of the Office of Thrift Super4 vision shall be transferred to the Office of the Comptroller 5 of the Currency or the Corporation, allocated in a manner 6 consistent with section 1211(a). 7 8 (b) CONTRACTS RELATED
FERRED.All TO
PROPERTY TRANS-
contracts, agreements, leases, licenses, per-
9 mits, and similar arrangements relating to property trans10 ferred to the Office of the Comptroller of the Currency 11 or the Corporation by this section shall be transferred to 12 the Office of the Comptroller of the Currency or the Cor13 poration together with that property. 14 (c) PRESERVATION
OF
PROPERTY.Property identi-
15 fied for transfer under this section shall not be altered, 16 destroyed, or deleted before transfer under this section. 17 (d) PROPERTY DEFINED.For purposes of this sec-
18 tion, the term property includes all real property (in19 cluding leaseholds) and all personal property (including 20 computers, furniture, fixtures, equipment, books, ac21 counts, records, reports, files, memoranda, paper, reports 22 of examination, work papers and correspondence related 23 to such reports, and any other information or materials). 24 25
SEC. 1213. FUNDS TRANSFERRED.
Except to the extent needed to dispose of affairs
26 under section 1214, all funds that, on the day before the
105 1 transfer date, are available to the Director of the Office 2 of Thrift Supervision to pay the expenses of the Office 3 of Thrift Supervision shall be transferred to the Office of 4 the Comptroller of the Currency or the Corporation, allo5 cated in a manner consistent with section 1211(a), on the 6 transfer date. 7 8
SEC. 1214. DISPOSITION OF AFFAIRS.
(a) IN GENERAL.During the 90-day period begin-
9 ning on the transfer date, the Director of the Office of 10 Thrift Supervision 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (1) shall, solely for the purpose of winding up the affairs of the agency related to any function transferred to the Office of the Comptroller of the Currency or the Corporation by this title (A) manage any employees of the Office of Thrift Supervision and provide for the payment of the compensation and benefits of any such employees that accrue before the transfer date; and (B) manage any property of the Office of Thrift Supervision until the property is transferred under section 1212; and (2) may take any other action necessary to wind up the affairs of the Office of Thrift Supervision relating to the transferred functions.
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106 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 (b) AUTHORITY AND STATUS OF DIRECTOR. (1) IN

the trans-
fers of functions under this title, the Director of the Office of Thrift Supervision shall, during the 90-day period beginning on the transfer date, retain and may exercise any authority vested in the Director on the day before the transfer date that is necessary to carry out the requirements of this title during that period. (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 he or she was receiving on the day before the transfer date.
SEC. 1215. CONTINUATION OF SERVICES.
Any agency, department, or other instrumentality of
22 the United States, and any successor to any such agency, 23 department, or instrumentality, that was, before the trans24 fer date, providing support services to the Office of Thrift
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107 1 Supervision in connection with functions to be transferred 2 to the Office of the Comptroller of the Currency, shall 3 4 5 6 7 8 9 10 (1) continue to provide those services, subject to reimbursement, until the transfer of those functions is complete; and (2) consult with any such agency to coordinate and facilitate a prompt and orderly transition.
SEC. 1216. TREATMENT OF SAVINGS AND LOAN HOLDING COMPANIES.
(a) Section 2 of the Home Owners Loan Act (12
11 U.S.C. 1462) is amended in paragraph (1) by striking 12 DIRECTOR.The term Director means the Director of 13 the Office of Thrift Supervision and inserting COMP14
TROLLER.The
term Comptroller means the Comptroller
15 of the Currency. 16 (b) Section 10 of the Home Owners Loan Act (12
17 U.S.C. 1467a is amended as follows: 18 19 20 21 22 23 24 25 (1) In subsection (a)(1)(A) by striking Director and inserting Comptroller of the Currency; (2) In subsection (m) as follows: (A) in paragraph (2) by striking Director and inserting Comptroller; (B) in paragraph (2) by striking Director may grant and inserting Comptroller of the Currency may grant;
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108 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (C) in paragraph (2) by striking the Director deems and inserting the Comptroller deems; (D) in paragraph (2)(A) by striking Director and inserting Comptroller (E) in paragraph (2)(B) by striking Director and inserting Comptroller (F) in paragraph (2)(B)(iii) by striking Director and inserting Comptroller (G) in paragraph (4)(D) by striking Director and inserting Comptroller (H) in paragraph (4)(E) by striking Director and inserting Comptroller (I) in paragraph (7)(B) by striking Director and inserting Comptroller (3) In subsection (o) as follows: (A) in paragraph (3) in the heading by striking DIRECTOR and inserting BOARD; (B) in paragraph (3)(A) by striking Director and inserting Board; (C) in paragraph (3)(B) by striking Director and inserting Board; (D) in paragraph (3)(C) by striking Director and inserting Board;
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109 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 (E) in paragraph (3)(D) by striking Director and inserting Comptroller (F) in paragraph (7) by striking chartered by the Director and inserting chartered by the Comptroller; (G) in paragraph (7) by striking regulations as the Director may and inserting regulations as the Board may (4) by striking subsections (a) through (n), and (p) through (t), and redesignating current subsections (m) and (o) as (a) and (b), respectively.
SEC. 1217. PRACTICES OF CERTAIN MUTUAL THRIFT HOLDING COMPANIES PRESERVED.
(a) TREATMENT
TUAL
OF
DIVIDENDS
BY
CERTAIN MU-
HOLDING COMPANIES.Section 3(g) of the Bank
17 Holding Company Act (12 U.S. C. 1842(g)) is amended 18 by inserting new paragraphs (3) through (7) as follows: 19 20 21 22 23 24 25 (3) DECLARATION
OF DIVIDENDS.Every
subsidiary savings association of a mutual holding company shall give the Board not less than 30 days advance notice of the proposed declaration by its directors of any dividend on its guaranty, permanent, or other nonwithdrawable stock. Such notice period shall commence to run from the date of receipt of
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110 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 such notice by the Board. Any such dividend declared within such period, or without the giving of such notice to the Board, shall be invalid and shall confer no rights or benefits upon the holder of any such stock. (4) WAIVER
OF DIVIDENDS.Any
mutual
thrift holding company organized under section 10(b) of the Home Owners Loan Act shall be permitted to waive such companys right to receive any dividend declared by a subsidiary, if (A) 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; (B) the mutual holding company provides the Board with written notice of its intent to waive its right to receive dividends 30 days prior to the proposed date of payment of the dividend; and (C) the Board does not object. (5) STANDARDS
FOR WAIVER OF DIVIDEND.
The Board shall not object to a notice of intent to waive dividends under paragraph (4) if
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111 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 (A) the waiver would not be detrimental to the safe and sound operation of the savings association; and (B) 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 directors fiduciary duties to the mutual members of such company. (6) RESOLUTION
TICE.A INCLUDED IN WAIVER NO-
dividend waiver notice shall include a copy
of the resolution of the board of directors of the mutual holding company, in form and substance satisfactory to the Board, together with any supporting materials relied upon by the board of directors, concluding that the proposed dividend waiver is consistent with the board of directors fiduciary duties to the mutual members of the mutual holding company. (7) VALUATION.The Board will not consider waived dividends in determining an appropriate exchange ratio in the event of a full conversion to stock form..
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112 1 2 3 4
SEC. 1218. COMPOSITION OF BOARD OF DIRECTORS OF THE FEDERAL DEPOSIT INSURANCE CORPORATION.
Section 2 of the Federal Deposit Insurance Act (12
5 U.S.C. 1812) is amended 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (1) in subsection (a)(1) (A) in subparagraph (B), by striking Director of the Office of Thrift Supervision and inserting Chairman of the Board of Governors of the Federal Reserve System, or such other member of the Board of Governors as the Chairman of the Board of Governors shall designate; (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 and pending the appointment of a successor, or during the absence or disability of the Comptroller of the Currency, the acting Comptroller of the Currency shall be a member of the Board of Directors in the place of the Comptroller of the Currency.; and (2) in subsection (f)(2), by striking or of the Office of Thrift Supervision.
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113 1 2
SEC. 1219. AMENDMENTS TO SECTION 3.
3 U.S.C. 1813) is amended 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

(1) in subsection (b)(1)(C) (relating to the definition of the term savings association), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (2) in subsection (l)(5) (relating to the definition of the term deposit), in the introductory text, by striking , Director of the Office of Thrift Supervision, and inserting , and; (3) in subsection (q) (relating to the definition of the term appropriate Federal banking agency) (A) by amending paragraph (1) to read as follows: (1) the Comptroller of the Currency, in the case of any national bank, any Federal branch or agency of a foreign bank, or any savings association or savings and loan holding company;; (B) in paragraph (2)(F), by adding and at the end after the semicolon; (C) in paragraph (3), by striking ; and and inserting a period (D) by amending paragraph (3) to read as follows:
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114 1 2 3 4 5 6 7 8 9 10 (3) the Federal Deposit Insurance Corporation in the case of a State nonmember insured bank, State savings association, or a foreign bank having an insured branch.; and (E) by striking paragraph (4). (4) in subsection (z) (relating to the definition of the term Federal banking agency), by striking the Director of the Office of Thrift Supervision,.
Section 7(a) of the Federal Deposit Insurance Act
11 (12 U.S.C. 1817) is amended 12 13 14 15 16 17 18 19 20 21 22 23 24 (1) in paragraph (2) (A) in subparagraph (A) (i) in the first sentence, by striking the Director of the Office of Thrift Supervision; (ii) in the second sentence, by striking the Director of the Office of Thrift Supervision; (B) in subparagraph (B), by striking Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Director of the Office of Thrift Supervision, and inserting Comptroller of the Cur-
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115 1 2 3 4 5 6 7 8 9 10 11 12 13 rency and the Board of Governors of the Federal Reserve System,; (2) 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; and (3) in paragraph (7), by striking Director of the Office of Thrift Supervision,.
14 U.S.C. 1818) is amended 15 16 17 18 19 20 21 22 23 24 (1) in subsection (a)(8)(B)(ii), in the last sentence (A) by striking Director of the Office of Thrift Supervision each place it appears and inserting Comptroller of the Currency; (B) by inserting the Office of Thrift Supervision, as successor to after as a successor to and before the Federal Savings and Loan Insurance Corporation; (4) in subsection (o)
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116 1 2 3 4 5 6 7 8 (A) by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (5) in subsection (w)(3)(A), by striking Office of Thrift Supervision and inserting Office of the Comptroller of the Currency.
9 U.S.C. 1821) is amended 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (1) in subsection (c)(6) (A) in the heading, by striking DIRECTOR
OF THE OFFICE OF THRIFT SUPERVISION
and
inserting COMPTROLLER
OF THE CURRENCY;
(B) in subparagraph (A), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (C) in subparagraph (B), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; and (2) in subsection (d) (A) in paragraph (2)(F)(i), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (B) in paragraph (17)(A)
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117 1 2 3 4 5 6 7 8 (i) by striking Comptroller of the Currency; and (ii) by striking appropriate; and (C) in paragraph (18)(B), by striking or the Director of the Office of Thrift Supervision.
Section 13(k)(1)(A)(iv) of the Federal Deposit Insur-
9 ance Act (12 U.S.C. 1823(k) (1)(A)(iv)) is amended by 10 striking Director of the Office of Thrift Supervision and 11 inserting Comptroller of the Currency. 12 13
14 U.S.C. 1828) is amended 15 16 17 18 19 20 21 22 23 24 25 (1) in subsection (c)(2) (A) in subparagraph (A), by striking bank; and inserting bank or a savings association;; (B) in subparagraph (B), by inserting and at the end after the semicolon; (C) in subparagraph (C), by striking bank (except a savings bank supervised by the Director of the Office of Thrift Supervision); and and inserting bank or State savings association.; and
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118 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (D) by striking subparagraph (D); and (2) in subsection (g)(1), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (3) in subsection (i)(2) (A) by striking subparagraph (B) and inserting the following new subparagraph: (B) the Corporation, if the resulting institution is to be a State nonmember insured bank or insured State savings association.; and (B) by striking subparagraph (C); (4) in subsection (m) (A) in paragraph (1) (i) in subparagraph (A), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (ii) in subparagraph (B), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (B) in paragraph (2) (i) in subparagraph (A), by striking Director of the Office of Thrift Super-
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119 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 vision and inserting Comptroller of the Currency; (ii) in subparagraph (B), by striking Director of the Office of Thrift Supervision each place it appears and inserting Comptroller of the Currency; and (C) in paragraph (3) (i) in subparagraph (A), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; and (ii) in subparagraph (B), by striking Office of Thrift Supervision and inserting Comptroller of the Currency.
17 U.S.C. 1831e) is amended 18 19 20 21 22 23 24 25 (1) in subsection (e) (A) in paragraph (2) (i) in subparagraph (A)(ii), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (ii) in subparagraph (C), by striking Director of the Office of Thrift Super-
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120 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 (a) vision and inserting Comptroller of the Currency; (iii) in subparagraph (F), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (B) in paragraph (3) (i) in subparagraph (A), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (ii) in subparagraph (B), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (2) in subsection (h)(2), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency.
SEC. 1226. AMENDMENTS TO THE ALTERNATIVE MORTGAGE TRANSACTION PARITY ACT OF 1982.
AMENDMENTS
TO
SECTION
802.Section
22 802(a)(3) of the Alternative Mortgage Transaction Parity 23 Act of 1982 (12 U.S.C. 3801) is amended
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121 1 2 3 4 5 6 (1) by striking Comptroller of the Currency, and inserting Comptroller of the Currency and; and (2) by striking , and the Director of the Office of Thrift Supervision. (b) AMENDMENTS
TO
SECTION 804.Section 804(a)
7 of the Alternative Mortgage Transaction Parity Act of 8 1982 (12 U.S.C. 3803) is amended 9 10 11 12 13 14 15 16 17 18 19 20 21 22 (1) by amending paragraph (1) to read as follows: (1) with respect to banks, savings associations, mutual savings banks, and savings banks, only to transactions made in accordance with regulations governing alternative mortgage transactions as prescribed by the Comptroller of the Currency to the extent that such regulations are authorized by rulemaking authority granted to the Comptroller of the Currency under laws other than this section.; and (2) by striking paragraph (3).
SEC. 1227. AMENDMENTS TO THE BANK HOLDING COMPANY ACT OF 1956.
Section 4(f)(12)(A) of the Bank Holding Company
23 Act of 1956 (12 U.S.C. 1843) is amended striking Reso24 lution Trust Corporation.
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122 1 2 3
SEC. 1228. AMENDMENTS TO THE BANK PROTECTION ACT OF 1968.
Section 2 of the Bank Protection Act of 1968 (12
4 U.S.C. 1881) is amended 5 6 7 8 9 10 11 12 13 14 15 end; (3) in paragraph (3), by striking , and at the end and inserting a period; and (4) by striking paragraph (4).
SEC. 1229. AMENDMENTS TO THE BANK SERVICE COMPANY ACT.
(1) in paragraph (1), by striking national banks, and inserting national banks and federal savings associations.; (2) in paragraph (2), by inserting and at the
Section 1(b) of the Bank Service Company Act (12
16 U.S.C. 1861(b)) is amended 17 18 19 20 21 22 23 (1) in paragraph (4), by striking insured bank, and inserting insured bank or (2) by striking Office of Thrift Supervision and inserting Office of the Comptroller of the Currency; and (3) by striking , the Federal Savings and Loan Insurance Corporation,.
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123 1 2 3
SEC. 1230. AMENDMENTS TO THE COMMUNITY REINVESTMENT ACT OF 1977.
Section 803(1) of the Community Reinvestment Act
4 of 1977 (12 U.S.C. 2902(1)) is amended 5 6 7 8 9 10 11 12 13 14 15 16 (1) in subparagraph (A), by striking national banks and inserting national banks or savings associations (the deposits of which are insured by the Federal Deposit Insurance Corporation); (2) in subparagraph (B), by striking and bank holding companies; and inserting , bank holding companies and savings and loan holding companies;; and (3) by striking subparagraph (D).
SEC. 1231. AMENDMENTS TO THE DEPOSITORY INSTITUTION MANAGEMENT INTERLOCKS ACT.
(a) AMENDMENT
TO
17 the Depository Institution Management Interlocks Act (12 18 U.S.C. 3206) is amended 19 20 21 22 23 24 25 (1) in paragraph (1), by striking national banks, and inserting national banks and Federal savings associations (the deposits of which are insured by the Federal Deposit Insurance Corporation), ; (2) in paragraph (2), by striking and bank holding companies, and inserting , bank holding
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124 1 2 3 4 5 6 companies, and savings and loan holding companies, (3) by striking paragraph (4); (4) by redesignating paragraphs (5) and (6) as paragraphs (4) and (5), respectively. (b) AMENDMENT
TO
7 the Depository Institution Management Interlocks Act (12 8 U.S.C. 3207) is amended 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 (1) in paragraph (1), by striking national banks, and inserting national banks and Federal savings associations (the deposits of which are insured by the Federal Deposit Insurance Corporation), ; (2) in paragraph (2), by striking and bank holding companies, and inserting , bank holding companies, and savings and loan holding companies,; (3) at the end of paragraph (3), by inserting and after the comma; (4) by striking paragraph (4); and (5) by redesignating paragraph (5) as paragraph (4). (f) AMENDMENT
TO
SECTION 210.Subsection
24 210(a) of the Depository Institution Management Inter25 locks Act (12 U.S.C. 3208(a)) is amended
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125 1 2 3 4 5 6 (1) by striking his and inserting the; and (2) by inserting of the attorney General after enforcement functions.
SEC. 1232. AMENDMENTS TO THE EMERGENCY HOMEOWNERS RELIEF ACT.
Section 110 of the Emergency Homeowners Relief
7 Act (12 U.S.C. 2709) is amended 8 9 10 11 12 13 14 15 (1) by striking the Federal Home Loan bank Board and inserting Federal Housing Finance Agency; and (2) by striking the Federal Savings and Loan Insurance Corporation.
SEC. 1233. AMENDMENTS TO THE EQUAL CREDIT OPPORTUNITY ACT.
Section 704 of the Equal Credit Opportunity Act (15
16 U.S.C. 1691c) is amended in subsection (a) 17 18 19 20 21 22 23 24 25 (1) in paragraph (1)(A), by striking and Federal branches and Federal agencies of foreign banks, and inserting , Federal branches and Federal agencies of foreign banks, or a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;; (2) by striking paragraph (2); and (3) by redesignating paragraphs (3) through (9) as paragraphs (2) through (8).
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126 1 2 3 (a)
SEC. 1234. AMENDMENTS TO THE FEDERAL CREDIT UNION ACT.
AMENDMENTS
TO
SECTION
206.Section
4 206(g)(7) of the Federal Credit Union Act (12 U.S.C. 5 1786(g)(7)) is amended 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 (1) in subparagraph (A) (A) by inserting and after the semicolon at the end of clause (v); (B) in clause (vi) (i) by striking Federal Housing Finance Board and inserting Federal Housing Finance Agency; and (ii) by striking ; and after the semicolon and inserting a period; and (C) by striking clause (vii) (2) in subparagraph (D) (A) by inserting and after the semicolon at the end of clause (iii); (B) by striking ; and at the end of clause (iv) and inserting a period; and (C) striking clause (v).
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127 1 2 3 4
SEC. 1235. AMENDMENTS TO THE FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL ACT OF 1978.
(a) AMENDMENT
TO
SECTION 1002.Section 1002
5 of the Federal Financial Institutions Examination Council 6 Act of 1978 (12 U.S.C. 3301) is amended 7 8 9 10 (1) by striking Federal Home Loan Bank Board and inserting Federal Housing Finance Agency. (b) AMENDMENT
TO
SECTION
1003.Section
11 1003(1) of the Federal Financial Institutions Examina12 tion Council Act of 1978 (12 U.S.C. 3302(1)) is amended 13 by striking the Office of Thrift Supervision. 14 (c) AMENDMENTS
TO
SECTION 1004.Section
15 1004(a) of the Federal Financial Institutions Examina16 tion Council Act of 1978 (12 U.S.C. 3303) is amended 17 18 19 20 21 22 (1) by striking paragraph (4); and (2) by redesignating paragraph (5) as paragraph (4).
SEC. 1236. AMENDMENTS TO THE FEDERAL HOME LOAN BANK ACT.
(a) AMENDMENTS
TO
SECTION 18.Section 18(c) of
23 the Federal Home Loan Bank Act (12 U.S.C. 1438(c)) 24 is amended
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128 1 2 3 4 5 6 7 8 (1) by striking Director of the Office of Thrift Supervision each place it appears and inserting Comptroller of the Currency; (2) in paragraph (1)(B), by striking and the agencies under its administration or supervision; (3) in paragraph (5), by striking and such agencies. (b) AMENDMENTS TO SECTION 21A.Section 21A of
9 the Federal Home Loan Bank Act (12 U.S.C. 1441a) is 10 repealed. 11 12
SEC. 1237. AMENDMENTS TO THE FEDERAL RESERVE ACT.
Section 19 of the Federal Reserve Act (12 U.S.C.
13 461(b)) is amended 14 15 16 17 18 19 20 21 22 23 24 (1) in paragraph (1)(F), by striking the Director of the Office of Thrift Supervision and inserting the Comptroller of the Currency; and (B) in paragraph (4)(B), by striking the Director of the Office of Thrift Supervision and inserting the Comptroller of the Currency.
SEC. 1238. AMENDMENTS TO THE FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT
ACT OF 1989.
(a) AMENDMENTS
TO
SECTION 302.Section 302(1)
25 of the Financial Institutions Reform, Recovery, and En-
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129 1 forcement Act of 1989 (12 U.S.C. 1467a nt.) is amended 2 by striking Director of the Office of Thrift Supervision 3 and inserting Comptroller of the Currency. 4 (b) AMENDMENT
TO
SECTION
305.Section
5 305(b)(1) of the Financial Institutions Reform, Recovery, 6 and Enforcement Act of 1989 (12 U.S.C. 1464(b)(1) nt.) 7 is amended by striking Director of the Office of Thrift 8 Supervision and inserting Comptroller of the Cur9 rency. 10 (c) AMENDMENT
TO
SECTION 308.Section 308(a)
11 of the Financial Institutions Reform, Recovery, and En12 forcement Act of 1989 (12 U.S.C. 1463 nt.) is amended 13 by striking Director of the Office of Supervision and 14 Comptroller of the Currency. 15 (d) AMENDMENTS
TO
16 the Financial Institutions Reform, Recovery, and Enforce17 ment Act of 1989 (12 U.S.C. 1437 nt.) is amended 18 19 20 21 22 23 24 (1) in subsection (a), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (2) in subsection (b), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (3) in subsection (e)
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130 1 2 3 4 5 6 7 8 9 10 11 12 13 14 (e) (A) in paragraph (1), by striking the Office of Thrift Supervision and inserting Office of the Comptroller of the Currency; (B) in paragraph (2), by striking Director of the Office of Thrift Supervision each place it appears and inserting Comptroller of the Currency; (C) in paragraph (3), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; and (D) in paragraph (4), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency. AMENDMENT
TO
SECTION
1103.Section
15 1103(a) of the Financial Institutions Reform, Recovery, 16 and Enforcement Act of 1989 (12 U.S.C. 3332(a)) is 17 amended by striking and the Resolution Trust Corpora18 tion. 19 (f) AMENDMENTS
TO
SECTION 1205.Subsection
20 1205(b) of the Financial Institutions Reform, Recovery, 21 and Enforcement Act of 1989 (12 U.S.C. 1818 nt.) is 22 amended 23 (1) in paragraph (1)
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131 1 2 3 4 5 6 7 8 9 10 11 12 (A) in subparagraph (B), by striking Director of the Office of Thrift Supervision and inserting Comptroller of the Currency; (B) by striking subparagraph (D); (C) by redesignating subparagraphs (E) and (F) as paragraphs (D) and (E), respectively; (2) in paragraph (2), by striking paragraph (1)(F) and inserting paragraph (1)(E); and (3) in paragraph (5), by striking through (E) and inserting through (D). (g) AMENDMENTS
TO
13 of the Financial Institutions Reform, Recovery, and En14 forcement Act of 1989 (12 U.S.C. 1833b) is amended 15 16 17 18 19 20 21 22 23 (1) by striking the Thrift Depositor Protection Oversight Board of the Resolution Trust Corporation; (2) by inserting and after the Federal Housing Finance Board and before the Farm Credit Administration; and (3) by striking , and the Office of Thrift Supervision. (h) AMENDMENTS
TO
24 of the Financial Institutions Reform, Recovery, and En25 forcement Act of 1989 (12 U.S.C. 1833e) is amended
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132 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 (1) in subsection (a) (A) by striking paragraphs (2), (5), and (6); and (C) by redesignating paragraphs (3), and (4), as paragraphs (2), and (3), respectively; (2) in subsection (c) (A) by striking the Director of the Office of Thrift Supervision, and inserting , and; and (B) by striking the Thrift Depositor protection Oversight Board of the Resolution Trust Corporation, and the Resolution Trust Corporation. (3) in subsection (d) (A) by striking paragraphs (3), (5) and (6); and (B) by redesignating paragraphs (4), (7), and (8) as paragraphs (3), (4), and (5), respectively.
SEC. 1239. AMENDMENTS TO THE HOUSING ACT OF 1948.
Section 502(c) of the Housing Act of 1948 (12
22 U.S.C. 1701c(c)) is amended in the introductory text by 23 striking Director of the Office of Thrift Supervision and 24 inserting Comptroller of the Currency.
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133 1 2 3
SEC. 1240. AMENDMENTS TO THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1992.
(a) AMENDMENTS
TO
4 the Housing and Community Development Act of 1992 5 (12 U.S.C. 1707 nt.) is amended 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (1) in subsection (c)(1) (A) by amending subparagraph (C) to read as follows: (C) Comptroller of the Currency; and (B) by striking subparagraphs (D) through (F); and (C) by redesignating subparagraphs (G) and (H) as subparagraphs (D) and (E), respectively; (2) in subsection (f) (A) in paragraph (2) (i) by striking the Office of Thrift Supervision,; and (ii) in subparagraph (D), by striking Office of Thrift Supervision, and inserting Comptroller of the Currency,; (B) in paragraph (3) (i) by striking the Office of Thrift Supervision, and inserting Comptroller of the Currency,; and
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134 1 2 3 4 (b) (ii) in subparagraph (D), by striking Office of Thrift Supervision, and inserting Comptroller of the Currency,. AMENDMENT
TO
SECTION
1315.Section
5 1315(b) of the Housing and Community Development Act 6 of 1992 (12 U.S.C. 4515(b)) is amended by striking the 7 Federal Deposit Insurance Corporation, and the Office of 8 Thrift Supervision. and inserting and the Federal De9 posit Insurance Corporation.. 10 (c) AMENDMENT
TO
SECTION
1317.Section
11 1317(c) of the Housing and Community Development Act 12 of 1992 (12 U.S.C. 4517(c)) is amended by striking the 13 Federal Deposit Insurance Corporation, or the Director 14 of the Office of Thrift Supervision and inserting or the 15 Federal Deposit Insurance Corporation. 16 17 18
SEC. 1241. AMENDMENTS TO THE HOUSING AND URBANRURAL RECOVERY ACT OF 1983.
Section 469 of the Housing and Urban-Rural Recov-
19 ery Act of 1983 (12 U.S.C. 1701p1) is amended in the 20 first sentence by striking Federal Home Loan Bank 21 Board and inserting Federal Housing Finance Agency. 22 23
SEC. 1242. AMENDMENTS TO THE NATIONAL HOUSING ACT.
Section 203(s) of the National Housing Act (12
24 U.S.C. 1709(s)) is amended
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135 1 2 3 4 5 6 7 8 9 10 11 12 13 (1) in paragraph (5), by revising the paragraph to read as follows: if the mortgagee is a national bank, a subsidiary or affiliate of such a bank, a Federal savings association or a subsidiary or affiliate of a savings association, the Comptroller of the Currency; (2) in paragraph (7) by inserting or State savings association after State bank; and (3) by striking paragraph (8).
SEC. 1243. AMENDMENTS TO THE RIGHT TO FINANCIAL PRIVACY ACT OF 1978.
Section 11(7) of the Right to Financial Privacy Act
14 of 1978 (12 U.S.C. 3401(7)) is amended 15 16 17 18 19 20 (a) (1) by striking subparagraph (B); and (2) by redesignating subparagraphs (C) through (I) as subparagraphs (B) through (H), respectively.
SEC. 1244. AMENDMENTS TO THE BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT OF 1985.
AMENDMENTS
TO
SECTION
255.Section
21 255(g)(1)(A) of the Balanced Budget and Emergency 22 Deficit Control Act of 1985 (2 U.S.C. 905(g)(1)(A)) is 23 amended by striking Director of the Office of Thrift Su24 pervision.
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136 1 (b) AMENDMENTS

TO
SECTION
256.Section
2 256(h)(4) of the Balanced Budget and Emergency Deficit 3 Control Act of 1985 (2 U.S.C. 906(h)(4)) is amended 4 5 6 7 8 9 10 (1) by striking subparagraphs (C) and (G); and (2) by redesignating subparagraphs (D), (E), (F), and (H) as subparagraphs (C) through (G), respectively.
SEC. 1245. AMENDMENTS TO THE CRIME CONTROL ACT OF 1990.
(a) AMENDMENTS
TO
SECTION 2539.Section
11 2539(c)(2) of the Crime Control Act of 1990 (Public Law 12 101647) is amended by striking subparagraph (F) and 13 redesignating subparagraphs (G) and (H) as subpara14 graphs (F) through (G), respectively. 15 (b) AMENDMENT
TO
SECTION
2554.Section
16 2554(b)(2) of the Crime Control Act of 1990 (Public Law 17 101647) is amended by striking Director of the Office 18 of Thrift Supervision and inserting Comptroller of the 19 Currency. 20 21 22
SEC. 1246. AMENDMENT TO THE FLOOD DISASTER PROTECTION ACT OF 1973.
Section 3(a)(5) of the Flood Disaster Protection Act
23 of 1973, as amended (42 U.S.C. 4003(a)(5)) is amended 24 by striking the Office of Thrift Supervision.
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137 1 2 3
SEC. 1247. AMENDMENTS TO THE INVESTMENT COMPANY ACT OF 1940.
Section 6(a)(3) of the Investment Company Act of
4 1940 (15 U.S.C. 80a6(a)(3)) is amended by striking 5 Federal Savings and Loan Insurance Corporation and 6 inserting Comptroller of the Currency. 7 8 9
SEC. 1248. AMENDMENTS TO THE NEIGHBORHOOD REINVESTMENT CORPORATION ACT.
The Neighborhood Reinvestment Corporation Act (42
10 U.S.C. 8105(c)(3)) is amended by striking the Federal 11 Home Loan Bank Board and inserting Federal Housing 12 Finance Agency. 13 14 15
SEC. 1249. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.
(a) AMENDMENTS
TO
SECTION 3.Section 3(a)(34)
16 of the Securities Exchange Act of 1934 (15 U.S.C. 17 78c(a)(34)) is amended 18 19 20 21 22 23 24 25 26

(1) in subparagraph (A) (A) in clause (i), by striking bank; and inserting bank, or a savings association (as defined in section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813 (b))), the deposits of which are insured by the Federal Deposit Insurance Corporation, a subsidiary or a department or division of any such savings association, or a savings and loan holding;;
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138 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (iv); (3) in subparagraph (C) (A) in clause (i), by striking bank; and inserting bank, or a savings association (as defined in section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813 (b))), the deposits of which are insured by the Federal Deposit Insurance Corporation, a subsidiary or a department or division of any such savings association, or a savings and loan holding;; (B) by striking clause (iv); and (iv); (2) in subparagraph (B) (A) in clause (i), by striking bank; and inserting bank, or a savings association (as defined in section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813 (b))), the deposits of which are insured by the Federal Deposit Insurance Corporation, a subsidiary or a department or division of any such savings association, or a savings and loan holding;; (B) by striking clause (iv); and (C) by redesignating clause (v) as clause (B) by striking clause (iv); and (C) by redesignating clause (v) as clause
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139 1 2 3 4 5 6 7 8 9 10 11 12 13 (iv); (4) in subparagraph (F) (A) in clause (i), by striking bank; and inserting or a savings association (as defined in section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813 (b))), the deposits of which are insured by the Federal Deposit Insurance Corporation; (B) by striking clause (ii); and (C) redesignating clauses (iii), (iv), and (v) as clauses (ii), (iii) and (iv), respectively. (b) AMENDMENTS
TO
(C) by redesignating clause (v) as clause
SECTION 15C.Section 15C of
14 the Securities Exchange Act of 1934 (15 U.S.C. 78o-5) 15 is amended in subsection (g)(1) by striking the Director 16 of the Office of Thrift Supervision, the Federal Savings 17 and Loan Insurance Corporation, 18 19 20 (a)
SEC. 1250. AMENDMENTS TO TITLE 18, UNITED STATES CODE.
AMENDMENT
TO
SECTION
212.Section
21 212(c)(2) of title 18, United States Code, is amended 22 23 24 25 (1) by striking subparagraph (C); and (2) by redesignating subparagraphs (D)
through (H) as subparagraphs (C) through (G), respectively.
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140 1 (b) AMENDMENT

TO
2 title 18, United States Code, is amended by striking Of3 fice of Thrift Supervision, the Resolution Trust Corpora4 tion. 5 (c) AMENDMENT
TO
SECTION
981.Section
6 981(a)(1)(D) of title 18, United States Code, is amend7 ed 8 9 10 11 12 and (2) by striking or the Office of Thrift Supervision. (d) AMENDMENT
TO
(1) by striking Resolution Trust Corporation;
SECTION
982.Section
13 982(a)(3) of title 18, United States Code, is amended 14 15 16 17 18 (1) by striking Resolution Trust Corporation;and (2) by striking or the Office of Thrift Supervision. (f) AMENDMENT
TO
19 of title 18, United States Code, is amended 20 21 22 23 24 and (2) by striking the Resolution Trust Corporation. (g) AMENDMENT
TO
(1) by striking Office of Thrift Supervision;
25 of title 18, United States Code, is amended
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141 1 2 3 4 and (2) by striking Resolution Trust Corporation. (h) AMENDMENT

TO
(1) by striking Office of Thrift Supervision;
5 of title 18, United States Code, is amended 6 7 8 9 10 11 12 (1) by striking or the Director of the Office of Thrift Supervision; and (2) by striking the Resolution Trust Corporation;
SEC. 1251. AMENDMENTS TO TITLE 31, UNITED STATES CODE.
(a) AMENDMENT
TO
13 title 31, United States Code, is amended to read as fol14 lows: 15 309. Division of Thrift Supervision 16 The Division of Thrift Supervision established
17 under section 3(a) of the Home Owners Loan Act shall 18 be a division in the Office of the Comptroller of the Cur19 rency.. 20 (b) AMENDMENTS
TO
21 title 31, United States Code, is amended 22 23 (1) by inserting and at the end of subsection (c)(1);
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142 1 2 3 4 5 (2) in subsection (c)(2) by striking Comptroller of the Currency; and and inserting Comptroller of the Currency.; and (3) by striking subsection (e). (c) AMENDMENTS
TO
6 title 31, United States Code, is amended in subsection (a) 7 by striking the Office of the Comptroller of the Currency, 8 and the Office of Thrift Supervision. and inserting and 9 the Office of the Comptroller of the Currency.. 10 11 12 13 14 15 16 17 18
Subtitle DFurther Improvements to the Regulation of Bank Holding Companies and Depository Institutions
SEC. 1301. TREATMENT OF CREDIT CARD BANKS, INDUSTRIAL LOAN COMPANIES, AND CERTAIN
OTHER COMPANIES UNDER THE BANK HOLDING COMPANY ACT.
(a) DEFINITIONS.Section 2 of the Bank Holding
19 Company Act of 1956 (12 U.S.C. 1841), is amended 20 21 22 23 24 25 (1) in subsection (a)(5), by adding at the end the following new subparagraph: (G) No company is a bank holding company by virtue of its ownership or control of a section six holding company or any subsidiary of a section six holding company, so long as the
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143 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 requirements of sections 4(p) and 6 of this Act are met, as applicable, by the section six holding company; (2) in subsection (c)(1)(A), by striking insured bank and inserting insured depository institution, and by striking section 3(h) of the Federal Deposit Insurance Act and inserting section 3(c)(2) of the Federal Deposit Insurance Act.; (3) in subsection (c)(2) (A) by striking subparagraph (B); (B) by striking subparagraphs (F) and (H), and (C) by redesignating existing subparagraphs (C), (D), (E) and (G) as subparagraphs (B), (C), (D) and (E), respectively; and (4) at the end of section 2, adding the following new subsection: (r) SECTION SIX HOLDING COMPANIES.A section
19 six holding company means a company that is required 20 to be established as an intermediate holding company 21 under section 6 of this Act.. 22 (b) NONBANKING ACTIVITIES EXCEPTIONS.Section
23 4 of the Bank Holding Company Act of 1956 (12 U.S.C. 24 1843) is amended
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144 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (1) in subsection (f)(1)(B) by striking for purposes of this Act and inserting for purposes of section 4(a); and (2) by adding after subsection (f)(2)(C) the following: (D) such company fails to (i) establish and register a section six holding company pursuant to section 6 of this Act within 90 days after the date of enactment of the Financial Stability Improvement Act of 2009, unless the Board grants an extension of such period for compliance which shall not exceed 180 additional days; and (ii) conduct all its activities which are financial in nature or incidental thereto as determined under section 4(k) through such section six holding company, in accordance with regulations prescribed by or orders issued by the Board, pursuant to section 6 of this Act.; and (3) by inserting at the end the following new subsection: (p) CERTAIN COMPANIES NOT SUBJECT
TO
THIS
25 ACT.
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145 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (1) IN
GENERAL.Except
as provided in para-
graphs (6) and (7), any company which (A)(i) was (I) a unitary savings and loan holding company on May 4 1999, or became a unitary savings and loan holding company pursuant to an application pending before the Office of Thrift Supervision on of before that date, and that (aa) on June 30, 2009, continued to control not fewer than one savings association that it controlled on May 4, 1999, which became a bank for purposes of the Bank Holding Company Act as a result of the enactment of section 1301(a)(2)(A); and (bb) on June 30, 2009 and the date of enactment of the Financial Stability Improvement
Act of 2009, such savings association subsidiary was and remains a qualified thrift lender
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146 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 or (bb) subject to the Bank Holding Company Act by reason of section 8(a) of the International Banking Act of 1978 (12 U.S.C. 3106(a)); and (B) on June 30, 2009, directly or indirectly controlled shares or engaged in activities that did not, on the day before the date of enactment of the Financial Stability Act of 2009 comply with the activity or investment restrictions on financial holding companies in section (as determined by section 10 of the Home Owners Loan Act); or (ii) on June 30, 2009, controlled (I) an institution which became a bank as a result of the enactment of section 1301(a)(2)(B) of the Financial Stability Improvement Act of 2009, or (II) an institution it has continuously controlled since March 5, 1987, which became a bank as a result of the enactment of the Competitive Equality Banking Act of 1987, pursuant to subsection (f); (B) was not on June 30, 2009 (aa) a bank holding company;
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147 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 4 in accordance with regulations prescribed by the Board, that did not, on the day before the date of enactment of the Financial Stability Act of 2009 comply with the activity or investment restrictions on financial holding companies in section 4 in accordance with regulations prescribed by the Board, shall not be treated as a bank holding company for purposes of this Act solely by virtue of such companys control of such institution and control of a section six holding company established pursuant to section 6. (2) LOSS
OF EXEMPTION.A
company de-
scribed in paragraph (1) shall no longer qualify for the exemption provided under that paragraph if (A) such company fails to (i) establish and register a section six holding company pursuant to section 6 of this Act within 90 days after the date of enactment of the Financial Stability Improvement Act of 2009, unless the Board grants an extension of such period for compliance which shall not exceed 180 additional days; and
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148 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (ii) maintain a section six holding company in compliance with all the requirements for a section six holding company under section 6 of this Act. (B) such company directly or indirectly (including through the section six holding company it must form pursuant to this subsection and section 6 of this Act) acquires ownership or control of more than 5 percent of the shares or assets of an additional bank or insured depository institution after June 30, 2009, other than (i) shares held as a bona fide fiduciary (whether with or without the sole discretion to vote such shares); (ii) shares held by any person as a bona fide fiduciary solely for the benefit of employees of either the company described in paragraph (1) or any subsidiary of that company and the beneficiaries of those employees; (iii) shares held temporarily pursuant to an underwriting commitment in the normal course of an underwriting business;
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149 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (iv) shares held in an account solely for trading purposes; (v) shares over which no control is held other than control of voting rights acquired in the normal course of a proxy solicitation; (vi) loans or other accounts receivable acquired from an insured depository institution in the normal course of business; (vii) shares or assets acquired in securing or collecting a debt previously contracted in good faith, during the 2-year period beginning on the date of such acquisition or for such additional time (not exceeding 3 years) as the Board may permit if the Board determines that such an extension will not be detrimental to the public interest; (C)(i) the section six holding company required to be established by such company, or any subsidiary bank of such company undergoes a change in control after the date of enactment of the Financial Stability Improvement Act of 2009, other than
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150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (I) the merger or whole acquisition of such parent company in a bona fide merger or acquisition (as shall be determined by the Board, which is authorized to find that a transaction is not a bona fide merger or acquisition and thus results in the loss of exemption), with a company that is predominantly engaged in activities not permissible for a financial holding company pursuant to section 4(k), or (II) the acquisition of additional shares by a company that owned or controlled 7.5 percent or more of any class of such parent companys outstanding voting stock on or before June 30, 2009, and continuously owned or controlled at least such 7.5 percent since June 30, 2009. (ii) Nothing in this subparagraph shall be construed as preventing the Board from requiring compliance with this subsection, section 6 or the requirements of the Change in Bank Control Act (12 U.S.C. 1817(j)), as applicable to a company that is permitted to acquire control without loss of the exemption in this subsection 4(p)(2); or
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151 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (D) any subsidiary bank of such company engages in any activity after the date of enactment of the Financial Stability Improvement Act of 2009 which would have caused such institution to be a bank (as defined in section 2(c) of this Act, as in effect before such date) if such activities had been engaged in before such date. (3) DIVESTITURE
EMPTION.If IN CASE OF LOSS OF EX-
any company described in paragraph
(1) fails to qualify for the exemption provided under paragraph (1) by operation of paragraph (2), such exemption shall cease to apply to such company and such company shall divest control of each bank it controls before the end of the 180-day period beginning on the date on which the company receives notice from the Board that the company has failed to continue to qualify for such exemption, unless, before the end of such 180-day period, the company has (A) either (i) corrected the condition or ceased the activity that caused the company to fail to continue to qualify for the exemption; or
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152 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (ii) submitted a plan to the Board for approval to cease the activity or correct the condition in a timely manner (which shall not exceed 1 year); and (B) implemented procedures that are reasonably adapted to avoid the reoccurrence of such condition or activity. (4) SUBSECTION
CERTAIN CEASES TO APPLY UNDER
CIRCUMSTANCES.This
subsection shall
cease to apply to any company described in paragraph (1) if such company (A) registers as a bank holding company under section 2(a) of this Act; (B) immediately upon such registration, complies with all of the requirements of this chapter, and regulations prescribed by the Board pursuant to this chapter, including the nonbanking restrictions of this section; and (C) does not, at the time of such registration, control banks in more than one State, the acquisition of which would be prohibited by section 3(d) of this Act if an application for such acquisition by such company were filed under section 3(a) of this Act.
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153 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (5) INFORMATION

REQUIREMENT.Each
com-
pany described in paragraph (1) shall, within 60 days after the date of enactment of the Financial Stability Improvement Act of 2009, provide the Board with the name and address of such company, the name and address of each bank such company controls, and a description of each such banks activities. (6) EXAMINATIONS
AND REPORTS.The
Board may, from time to time, examine a company described in paragraph (1) or a bank controlled by such a company, and may require reports under oath from a company described in paragraph (1), and appropriate officers or directors of such company, in each case solely for purposes of assuring compliance with the provisions of this subsection and enforcing such compliance. (7) LIMITED (A) IN
ENFORCEMENT. GENERAL.In
addition to any
other power of the Board, the Board may enforce compliance with the provisions of this subsection which are applicable to any company described in paragraph (1), and any bank controlled by such company, under section 8 of the Federal Deposit Insurance Act, and such com-
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154 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 pany or bank shall be subject to such section (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 described in paragraph (1) or any bank controlled by such a company, may also be treated as a violation of the Federal Deposit Insurance Act for purposes of subparagraph (A). (C) NO
ITY.No EFFECT ON OTHER AUTHOR-
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) SECTION SIX HOLDING COMPANIES.The Bank
17 Holding Company Act (12 U.S.C. 1841 et seq.) is amend18 ed by inserting after section 5 the following new section: 19 20 21 22 23 24 25
SEC. 6. SPECIAL-PURPOSE HOLDING COMPANIES.
(a) ESTABLISHMENT, PURPOSE

MENTS OF
AND
REQUIRE-
SPECIAL PURPOSE HOLDING COMPANIES.
(1) REQUIREMENT.A special purpose holding company (hereafter in this section referred to as a section 6 holding company) shall be established and maintained by a company
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155 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (A) described in section 4(f)(1) as required by section 4(f)(2)(D) of this Act; (B) described in section 4(p)(1) as required by section 4(p)(2)(A) of this Act; or (C) that (i) is subject to heightened prudential standards under Subtitle B of the Financial Stability Improvement Act of 2009; (ii) is not (I) a bank holding company, or (II) subject to the Bank Holding Company Act by reason of section 8(a) of the International Banking Act of 1978 (12 U.S.C. 3106(a)); and (ii) directly or indirectly controlled shares or engaged in activities that did not, on the date the company is first subject to heightened prudential standards pursuant to subtitle B of the Financial Stability Improvement Act of 2009, comply with the activity or investment restrictions on financial holding companies in section 4 in accordance with regulations prescribed by the Board.
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156 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (2) PURPOSE. (A) A company that is required to form a section 6 holding company shall conduct all of its activities that are determined to be financial in nature or incidental thereto under section 4(k) and shall hold any shares of a bank or insured depository institution controlled by such company, through the section 6 holding company, unless the Board specifically determines otherwise in accordance with paragraph (6). (B) A section 6 holding company shall be prohibited from conducting any activities or investing in any companies other than those permissible for a financial holding company under section 4, unless the Board specifically determines otherwise in accordance with paragraph (6). (3) REGISTRATION. (A) A section 6 holding company required to be established by a company described in subparagraph (1)(A) shall be established, and such company shall register with the Board as a bank holding company, pursuant to the requirements in section 4(f).
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157 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (B) A section 6 holding company required to be established by a company described in subparagraph (1)(B) shall be established, and such company shall register with the Board as a bank holding company, pursuant to the requirements in section 4(p). (C) A section 6 holding company required to be established by a company described in paragraph (1)(C) shall be (i) established, and such company shall register with the Board, as a bank holding company within 90 days after such company or such companys parent holding company has been notified by the Board that such company is subject to heightened prudential standards under Subtitle B of the Financial Stability Improvement Act of 2009, unless the Board grants an extension of such period for compliance which shall not exceed 180 additional days; (ii) treated as a financial holding company under this Act; and (iii) subject to the authority of the Board to enforce compliance with the provisions of this section under section 8 of
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158 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 the Federal Deposit Insurance Act in the same manner and to the same extent as if such company were a bank holding company. (4) RULE
OF CONSTRUCTION.For
purposes
of this section, designation of an already established intermediate holding company that will serve as the section 6 holding company shall satisfy the requirement to establish a section 6 holding company, provided that such existing intermediate holding company complies with all other provisions applicable to a section 6 holding company. (5) LIMITATIONS
CIAL PARENT.A ON AUTHORITY OF COMMER-
company that is not a bank hold-
ing company or treated as a bank holding company pursuant to section 8(a) of the International Bank Act of 1978 that has been notified that it is an identified financial holding company, pursuant to subtitle A of the Financial Stability Improvement Act of 2009, shall (A) not be deemed to be, or treated as, a bank holding company, solely because of its ownership or control of a section 6 holding company; and,
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159 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (B) not be subject to this Act, except for such provisions as are explicitly made applicable in this section. (6) BOARD
AUTHORITY. AND EXEMPTIONS.In
(A) RULES
addi-
tion to any other authority of the Board, the Board may, at its discretion, prescribe rules and regulations or issue orders regarding: (i) the establishment and operation of section 6 holding companies; (ii) exemptions from the requirement to conduct all activities that are financial or incidental thereto, as defined in section 4(k), through the section 6 holding company if such exemption (I) would not threaten the safety and soundness of the section 6 holding company or any subsidiary of the section 6 holding company; (II) would not increase systemic risk or threaten the stability of the overall financial system; and (III) would not result in unfair competitive advantage to the parent
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160 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 company of such section 6 holding company; and (iii) exemptions from the affiliate transaction requirements of subsection (b) if such exemption (I) is consistent with the purposes of this section, and section 23A and section 23B of the Federal Reserve Act; (II) would not threaten the safety and soundness of the section 6 holding company or any subsidiary of the section 6 holding company; (III) would not increase systemic risk or threaten the stability of the overall financial system; and (IV) would not result in unfair competitive advantage to the parent company of such section 6 holding company. (B) PARENT
COMPANY REPORTS.The
Board may, from time to time, require reports under oath from a company that controls a section 6 holding company, and appropriate officers or directors of such company, solely for
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161 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 purposes of ensuring compliance with the provisions of this section (including assessing the companys ability to serve as a source of financial strength pursuant to subsection (g)) and enforcing such compliance. (C) LIMITED
FORCEMENT. PARENT COMPANY EN-
(i) IN
GENERAL.In
addition to any
other power of the Board, the Board may enforce compliance with the provisions of this subsection which are applicable to any company described in paragraph (1), and any bank controlled by such company, under section 8 of the Federal Deposit Insurance Act and such company or bank shall be subject to such section (for such purposes) in the same manner and to the same extent as if such company were a bank holding company. (ii) APPLICATION
OF OTHER ACT.
Any violation of this subsection by any company that controls a section 6 holding company or any bank controlled by such a company, may also be treated as a viola-
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162 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (b)
ACTIONS.
tion of the Federal Deposit Insurance Act for purposes of clause (i). (iii) NO
ITY.No EFFECT ON OTHER AUTHOR-
provision of this subparagraph
shall be construed as limiting any authority of the Board or any other Federal agency under any other provision of law. RESTRICTIONS
ON
AFFILIATE
TRANS-
(1) SECTION (A) IN
23A AND 23B APPLICABILITY. GENERAL.Transactions
between
a section 6 holding company established under this section (including any subsidiary of such company) and any affiliate of such company that is not a subsidiary of the section 6 holding company shall be subject to the restrictions and limitations contained in section 23A and section 23B of the Federal Reserve Act as if the section 6 holding company were a member bank. (B) COVERED
TRANSACTIONS.
(i) A depository institution controlled by a section 6 holding company may not engage in a covered transaction (as defined in section 23A(b)(7) of the Federal Reserve Act) with any affiliate that is not the
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163 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 section 6 holding company or a subsidiary of the section 6 holding company. (ii) For purposes of this subparagraph (B), any transaction by a depository institution controlled by a section 6 holding company with any person shall be deemed to be a transaction with an affiliate that is not the section 6 holding company or a subsidiary of the section 6 holding company to the extent that the proceeds of the transaction are used for the benefit of, or transferred to, that affiliate. (2) RULE
OF CONSTRUCTION.No
provision
of this subsection shall be construed as exempting any subsidiary insured depository institution of a section 6 holding company from compliance with section 23A or 23B of the Federal Reserve Act with respect to each affiliate of such institution (as defined in section 23A or 23B of the Federal Reserve Act), including any affiliate that is the section 6 holding company or subsidiary of the section 6 holding company. (c) TYING PROVISIONS.A company that directly or
24 indirectly controls a section 6 holding company shall be
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164 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
TO
(1) treated as a bank holding company for purposes of section 106 of the Bank Holding Company Act Amendments of 1970 and section 22(h) of the Federal Reserve Act and any regulation prescribed under any such section; and (2) subject to the restrictions of section 106 of the Bank Holding Company Act Amendments of 1970, in connection with any transaction involving the products or services of such company or affiliate and those of a bank affiliate, as if such company or affiliate were a bank and such bank were a subsidiary of a bank holding company. (d) CROSS MARKETING RESTRICTIONS APPLICABLE COMMERCIAL ACTIVITIES. (1) IN
GENERAL.A
section 6 holding com-
pany shall not (A) offer or market, directly or through any arrangement, any product or service of an affiliate that is not a subsidiary of the section 6 holding company; or (B) permit any of the products or services of the section 6 holding company or any subsidiary thereof to be offered or marketed, directly or through any arrangement, by or
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165 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 through any affiliate that is not a subsidiary of the section 6 holding company. (2) BOARD
TIONS.The AUTHORITY TO GRANT EXEMP-
Board may grant exemptions from the
restrictions in this subsection if (A) the arrangement does not violate section 106 of the Bank Holding Company Act Amendments of 1970; and (B) the Board determines that the arrangement is in the public interest, does not undermine the separation of banking and commerce, and is consistent with the safety and soundness of the section 6 holding company. (e) FINANCIAL HOLDING COMPANY REQUIREMENTS.A
section 6 holding company shall be subject
16 to 17 18 19 20 21 22 23 24 25 (1) the conditions for engaging in expanded financial activities in section 4(l); and (2) the provisions applicable to financial holding companies that fail to meet certain requirements in section 4(m). (f) INDEPENDENCE
PANY. OF
SECTION 6 HOLDING COM-
(1) No less than 25 percent of the members of the board of directors of a section 6 holding com-
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166 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 pany, and each subsidiary of a section 6 holding company shall be independent of the parent company of the section 6 holding company and any subsidiary of such parent company. For purposes of this subsection, a director shall be independent of the parent company if such person is not currently serving, and has not within the previous two-year period served, as a director, officer, or employee of any affiliate of the section 6 holding company that is not a subsidiary of the section 6 holding company. (2) No executive officer of a section 6 holding company or any subsidiary of a section 6 holding company may serve as a director, officer, or employee of an affiliate of the section 6 holding company that is not a subsidiary of the section 6 holding company. (3) The Board shall issue regulations that require effective legal and operational separation of the functions of a section 6 holding company from its affiliates that are not subsidiaries of such section 6 holding company. (g) SOURCE
OF
STRENGTH.A company that di-
23 rectly or indirectly controls a section 6 holding company 24 shall serve as a source of financial strength to its sub25 sidiary section 6 holding company..
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167 1 (d) CONFORMING CHANGES.Section 4(h) of the
2 Bank Holding Company Act of 1956 (12 U.S.C. 1843(h)), 3 is amended 4 5 6 7 8 9 10 11 12 (1) in paragraph (1), by striking subparagraph (D), (F), (G), or (H) and inserting subparagraph (C) or (D); and (2) in paragraph (2), by striking subparagraph (D), (F), (G), or (H) and inserting subparagraph (C) or (D).
SEC. 1302. REGISTRATION OF CERTAIN COMPANIES AS BANK HOLDING COMPANIES.
Section 5 of the Bank Holding Company Act of 1956
13 (12 U.S.C. 1844) is amended by inserting at the end the 14 following new subsection: 15 (h) CONVERSION
TO
BANK HOLDING COMPANY
BY
16 OPERATION OF LAW. 17 18 19 20 21 22 23 24 25 (1) CONVERSION

BY OPERATION OF LAW.A
company that, on the day before the date of enactment of the Financial Stability Improvement Act of 2009, was not a bank holding company but which, by reason of sections 4(p) and 6 becomes a bank holding company by operation of law, shall register as a bank holding company with the Board in accordance with section 5(a) within 90 days of the date of enactment of that Act.
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168 1 2 3 4 5 6 7 8 9 10 11 (2) COMPLIANCE

PANY ACT.With WITH BANK HOLDING COM-
respect to any company described
in paragraph (1), the Board may grant temporary exemptions or provide other appropriate temporary relief to permit such company to implement measures necessary to comply with the requirements under the Bank Holding Company Act..
SEC. 1303. REPORTS AND EXAMINATIONS OF BANK HOLDING COMPANIES; REGULATION OF FUNCTIONALLY REGULATED SUBSIDIARIES.
(a) REPORTS
OF
BANK HOLDING COMPANIES.Sec-
12 tions 5(c)(1)(A) and (B) of the Bank Holding Company 13 Act of 1956 (12 U.S.C. 1844(c)(1)(A) and (B)) are 14 amended to read as follows: 15 16 17 18 19 20 21 22 23 24 (A) IN
GENERAL.The
Board, from time
to time, may require a bank holding company and any subsidiary of such company to submit reports under oath that the Board determines are necessary or appropriate for the Board to carry out the purposes of this chapter, prevent evasions thereof, and monitor compliance by the company or subsidiary with the applicable provisions of law. (B) USE
OF EXISTING REPORTS.
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169 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 (i) IN
GENERAL.The
Board shall,
to the fullest extent possible, use: (I) reports that a bank holding company or any subsidiary of such company has been required to provide to other Federal or State regulatory agencies; (II) information that is otherwise required to be reported publicly; and (III) externally audited financial statements. (ii) AVAILABILITY.A bank holding company or a subsidiary of such company shall promptly provide to the Board, at the request of the Board, a report referred to in clause (i)(I).. (b) FUNCTIONALLY REGULATED SUBSIDIARY.Sec-
19 tion 5(c)(1) of the Bank Holding Company Act of 1956 20 (12 U.S.C. 1844(c)(1)) is amended by inserting at the end 21 the following new subparagraph: 22 23 24 (C) DEFINITION.For purposes of this subsection and section 6, the term functionally regulated subsidiary means any subsidiary
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170 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (other than a depository institution) of a bank holding company that is (i) a broker or dealer registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934, for which the Securities and Exchange Commission is the Federal regulatory agency; (ii) an investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940, for which the Securities and Exchange Commission is the Federal regulatory agency; (iii) an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940, for which the Securities and Exchange Commission is the Federal regulatory agency, with respect to the investment advisory activities of such investment adviser and activities incidental to such investment advisory activities; and (iv) a futures commission merchant, commodity trading advisor, and commodity
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171 1 2 3 4 5 6 7 8 9 10 pool operator registered with the Commodity Futures Trading Commission
under the Commodity Exchange Act, for which the Commodity Futures Trading Commission is the Federal regulatory agency, with respect to the commodities activities of such entity and activities incidental to such commodities activities.. (c) EXAMINATIONS
NIES.Sections OF
BANK HOLDING COMPA-
5(c)(2)(A) and (B) of the Bank Holding
11 Company Act of 1956 (12 U.S.C. 1844(c)(2)(A) and (B)) 12 are amended to read as follows: 13 14 15 16 17 18 19 20 21 22 23 24 (A) IN
GENERAL.The
Board may make
examinations of a bank holding company and any subsidiary of such a company to carry out the purposes of this chapter, prevent evasions thereof, and monitor compliance by the company or subsidiary with applicable provisions of law. (B) FUNCTIONALLY
POSITORY INSTITUTION REGULATED AND DESUBSIDIARIES.The
Board shall, to the fullest extent possible, use reports of examination of functionally regulated subsidiaries and subsidiary depository institu-
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172 1 2 3 4 tions made by other Federal or State regulatory authorities.. (d) REGULATION
NIES.Section OF
FINANCIAL HOLDING COMPA-
5(c)(2) of the Bank Holding Company Act
5 of 1956 (12 U.S.C. 1844(c)) is amended by striking sub6 paragraphs (C), (D), and (E). 7 8 9 (e) AUTHORITY
ULATED TO
REGULATE FUNCTIONALLY REGOF
SUBSIDIARIES
BANK HOLDING COMPA-
NIES.The
Bank Holding Company Act of 1956 (12
10 U.S.C. 1841, et seq.) is amended by striking section 10A 11 (12 U.S.C. 1848a). 12 13 14 15
SEC. 1304. REQUIREMENTS FOR FINANCIAL HOLDING COMPANIES TO REMAIN WELL CAPITALIZED AND WELL MANAGED.
Section 4(l)(1) of the Bank Holding Company Act of
16 1956 (12 U.S.C. 1843(l)(1)) is amended 17 18 19 20 21 22 23 (1) in subparagraph (B), by striking and; (2) by redesignating subparagraph (C) as subparagraph (D); (3) by inserting after subparagraph (B) the following new subparagraph: (C) the bank holding company is well capitalized and well managed; and; and
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173 1 2 3 4 5 6 7 8 9 (4) in subparagraph (D)(as so redesignated) by striking clause (ii) and inserting the following new clause: (i) a certification that the company meets the requirements of subparagraphs (A) through (C)..
SEC. 1305. STANDARDS FOR INTERSTATE ACQUISITIONS.
(a) BANK HOLDING COMPANY ACT

MENT.Section
OF
1956 AMEND-
3(d)(1)(A) of the Bank Holding Company
10 Act of 1956 (12 U.S.C. 1842(d)(1)(A)) is amended 11 12 13 14 15 16 (1) by striking adequately capitalized and inserting well capitalized; and (2) by striking adequately managed and inserting well managed. (b) FEDERAL DEPOSIT INSURANCE ACT AMENDMENT.Section
44(b)(4)(B) of the Federal Deposit In-
17 surance Act (12 U.S.C. 1831u(b)(4)(B)) is amended to 18 read as follows: 19 20 21 22 (B) the responsible agency determines that the resulting bank will be well capitalized and well managed upon the consummation of the transaction..
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174 1 2 3
SEC. 1306. ENHANCING EXISTING RESTRICTIONS ON BANK TRANSACTIONS WITH AFFILIATES.
(a) Section 23A of the Federal Reserve Act (12
4 U.S.C. 371c) is amended 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

(1) in subsection (b)(1), by striking subparagraph (D) and inserting the following new subparagraph: (D) any investment fund with respect to which a member bank or affiliate thereof is an investment adviser; and (2) in subsection (b)(7)(A), by inserting (including a purchase of assets subject to an agreement to repurchase) after affiliate; (3) in subsection (b)(7)(C), by striking , including assets subject to an agreement to repurchase,; (4) in subsection (b)(7)(D) (A) by inserting or other debt obligations after acceptance of securities, and (B) by striking or after the semicolon; (5) in subsection (b)(7), by inserting at the end the following new subparagraphs: (F) any securities borrowing and lending transactions with an affiliate to the extent that the transactions create credit exposure of the member bank to the affiliate; or
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175 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (G) current and potential future credit exposure to the affiliate on derivative transactions with the affiliate;; (6) in subsection (c)(1), by striking at the time of the transaction, and inserting at all times; (7) in subsection (c) (A) by striking paragraph (2); (B) by redesignating paragraphs (3), (4), and (5) as paragraphs (2), (3), and (4), respectively; (8) in subsection (c)(3) (as so redesignated by paragraph (7)), by inserting or other debt obligations after securities; (9) in subsection (f)(2), by inserting at the end the following: The Board may not, by regulation or order, grant an exemption under this section unless the Board obtains the concurrence of the Chairman of the Federal Deposit Insurance Corporation.; and (10) in subsection (f) (A) by redesignating paragraph (3) as paragraph (4); (B) and inserting after paragraph (2) the following new paragraph:
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176 1 2 3 4 5 6 7 8 9 10 (3) CONCURRENCE

THE CURRENCY.With OF THE COMPTROLLER OF
respect to a transaction or
relationship involving a national bank or Federal savings association, the Board may not grant an exemption under this section unless the Board obtains the concurrence of the Comptroller of the Currency (in addition to obtaining the concurrence of the Chairman of the Federal Deposit Insurance Corporation under paragraph (2)).. (b) TECHNICAL
AND
CONFORMING AMENDMENT.
11 Section 23B(e) of the Federal Reserve Act (12 U.S.C. 12 3711(e)), is amended by inserting at the end the fol13 lowing new paragraph: 14 15 16 17 18 19 20 (3) The Board may not grant an exemption or exclusion under this section unless the Board obtains the concurrence of the Chairman of the Federal Deposit Insurance Corporation..
SEC. 1307. ELIMINATING EXCEPTIONS FOR TRANSACTIONS WITH FINANCIAL SUBSIDIARIES.
Section 23A(e) of the Federal Reserve Act (12 U.S.C.
21 371c(e)) is amended 22 23 24 (1) by striking paragraph (3); (2) by redesignating paragraph (4) as paragraph (3).
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177 1 2 3 4 5 6
SEC. 1308. LENDING LIMITS APPLICABLE TO CREDIT EXPOSURE ON DERIVATIVE TRANSACTIONS, REPURCHASE AGREEMENTS, REVERSE REPURCHASE AGREEMENTS, AND SECURITIES
LENDING AND BORROWING TRANSACTIONS.
Section 5200 of the Revised Statutes of the United
7 States (12 U.S.C. 84) is amended 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (1) in subsection (b)(1), by striking shall include all direct or indirect and all that follows in that paragraph through commitment; and inserting: 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, such term shall also include any liability of a national banking association to advance funds to or on behalf of a person pursuant to a contractual commitment; and (C) credit exposure to a person arising from a derivative transaction, repurchase agreement, reverse repurchase agreement, securities lending transaction, or securities borrowing
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178 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 transaction between the national banking association and the person;. (2) in subsection (b)(2) by striking the period at the end and inserting ; and; (3) in subsection (b), by inserting after paragraph (2) the following new paragraph: (3) the term derivative transaction means 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.; and (4) in subsection (d), by inserting after paragraph (2) the following new paragraph: (3) The Comptroller of the Currency shall prescribe rules to administer and carry out the purposes of this section with respect to credit exposures arising from any derivative transaction, repurchase agreement, reverse repurchase agreement, securities lending transaction, or securities borrowing transaction. Rules required to be prescribed under this paragraph (3) shall take effect, in final form, not
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179 1 2 3 4 5 later than 180 days after the date of enactment of the Financial Stability Improvement Act of 2009..
SEC. 1309. APPLICATION OF NATIONAL BANK LENDING LIMITS TO INSURED STATE BANKS.
6 U.S.C. 1828) is amended by adding at the end a new sub7 section: 8 (y) APPLICATION
OF
LENDING LIMITS
TO INSURED
9 STATE BANKS.Section 84 of this title shall apply to 10 every insured depository institution in the same manner 11 and to the same extent as if the insured depository institu12 tion were a national banking association.. 13 14 15 16
SEC. 1310. RESTRICTION ON CONVERSIONS OF TROUBLED BANKS.
(a) CONVERSION
TION TO A
OF A
NATIONAL BANKING ASSOCIA-
STATE BANK.The National Bank Consolida-
17 tion and Merger Act (12 U.S.C. 215 et seq.) is amended 18 by redesignating section 7 as section 8 and by inserting 19 after section 6 the following: 20 21
SEC. 7. PROHIBITION ON CERTAIN CONVERSIONS.
A national bank may not convert to a State bank
22 during any period of time in which it is subject to a Cease 23 and Desist order, memorandum of understanding, or other 24 enforcement action entered into with or issued by the 25 Comptroller of the Currency.
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180 1 (b) CONVERSION

OF A
STATE BANK
TO A
NATIONAL
2 BANK.Section 5154 of the Revised Statutes (12 U.S.C. 3 35) is amended by adding at the end the following new 4 sentence: The Comptroller of the Currency shall not ap5 prove the conversion of a State bank to a national bank 6 during any period of time in which the State bank is sub7 ject to a Cease and Desist order, memorandum of under8 standing, or other enforcement action entered into or 9 issued by a State bank supervisor, the Federal Deposit 10 Insurance Corporation, the Board of Governors of the 11 Federal Reserve System or a Federal Reserve Bank.. 12 13
SEC. 1311. LENDING LIMITS TO INSIDERS.
Section 22(h)(9)(D)(ii) of the Federal Reserve Act
14 (12 U.S.C. 375b(h)(9)(D)(ii)) is amended by inserting , 15 except that a member bank shall be deemed to have ex16 tended credit to a person if the member bank has credit 17 exposure to the person arising from a derivative trans18 action, repurchase agreement, reverse repurchase agree19 ment, securities lending transaction, or securities bor20 rowing transaction between the member bank and the per21 son. before the period at the end. 22 23 24
SEC. 1312. LIMITATIONS ON PURCHASES OF ASSETS FROM INSIDERS.
(a) Section 18 of the Federal Deposit Insurance Act
25 (12 U.S.C. 1828) is amended by inserting after subsection
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181 1 (y) (as added by section 1408) the following new sub2 section: 3 (z) GENERAL PROHIBITION.An insured depository
4 institution shall not purchase an asset from, or sell an 5 asset to, one of its executive officers, directors, or principal 6 shareholders or any related interest of such person (as 7 such terms are defined in 22(h) of Federal Reserve Act) 8 unless the transaction is on market terms and, if the 9 transaction represents more than 10 percent of the insti10 tutions capital stock and surplus, the transaction has 11 been approved in advance by a majority of the institutions 12 board of directors (with interested directors of the insured 13 depository institution not participating in the approval of 14 the transaction).. 15 (b) FDIC RULEMAKING AUTHORITY.The Federal
16 Deposit Insurance Corporation may prescribe rules to im17 plement the requirements of section (a). 18 (c) AMENDMENTS
TO THE
FEDERAL RESERVE
19 ACT.Section 22 of the Federal Reserve Act (12 U.S.C. 20 375) is amended by striking subsection (d). 21 22 23
SEC. 1313. RULES REGARDING CAPITAL LEVELS OF BANK HOLDING COMPANIES.
Section 5(b) of the Bank Holding Company Act of
24 1956 (12 U.S.C. 1844(b)) is amended by inserting , in-
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182 1 cluding regulations relating to the capital levels of bank 2 holding companies before the period at the end. 3 4 5
SEC. 1314. ENHANCEMENTS TO FACTORS TO BE CONSIDERED IN CERTAIN ACQUISITIONS.
(a) BANK ACQUISITIONS.Section 3(c) of the Bank
6 Holding Company Act of 1956 (12 U.S.C. 1842(c)) is 7 amended by inserting at the end the following new para8 graph: 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 (7) FINANCIAL
STABILITY.In
every case, the
Board shall take into consideration the extent to which the proposed acquisition, merger, or consolidation may pose risk to the stability of the United States financial system or the economy of the United States.. (b) NONBANK ACQUISITIONS. (1) Section 4(j)(2)(A) of the Bank Holding Company is amended by (A) striking or before unsound banking practices; and (B) inserting before the period at the end , or risk to the stability of the United States financial system or the economy of the United States.
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183 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 (2) Section 4(k)(6) of the Bank Holding Company Act is amended by striking subparagraph (B) and inserting the following new subparagraph: (B) A financial holding company may 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, except (i) for a transaction in which the total assets to be acquired by the financial holding company exceed $25 billion; and (ii) as provided in subsection (j) with regard to the acquisition of a savings association.. (c) BANK MERGER ACT TRANSACTIONS.Section
16 8(c)(5) of the Federal Deposit Insurance Act (12 U.S.C. 17 1828(c)(5)) is amended by 18 19 20 21 22 (1) striking and before the convenience and needs of the community to be served and (2) inserting before the period at the end , and the risk to the stability of the United States financial system and the economy of the United States.
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184 1 2 3
SEC. 1315 ELIMINATION OF ELECTIVE INVESTMENT BANK HOLDING COMPANY FRAMEWORK.
Section 17 of the Securities Exchange Act of 1934
4 (15 U.S.C. 78q) is amended by striking subsection (i) and 5 redesignating the following subsections accordingly. 6 7 8
SEC. 1316. EXAMINATION FEES FOR LARGE BANK HOLDING COMPANIES.
The Bank Holding Company Act is amended by add-
9 ing a new section 5A: 10 11

SEC. 5A. EXAMINATION FEES.
The Board of Governors of the Federal Reserve Sys-
12 tem or the Federal Reserve Banks shall assess fees on 13 bank holding companies with total consolidated assets of 14 $10 billion or more. Such fees shall be sufficient to defray 15 the cost of the examination of such bank holding compa16 nies... 17 18 19 20
Subtitle EPayment, Clearing, and Settlement Supervision

SEC. 1401. SHORT TITLE.
This subtitle may be cited as the Payment, Clearing,
21 and Settlement Supervision Act of 2009. 22 23 24 25

SEC. 1402. FINDINGS AND PURPOSES.
(a) FINDINGS.The Congress finds the following: (1) The proper functioning of the financial markets is dependent upon safe and efficient arrange-
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185 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 ments for the clearing 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 to provide consistency, to promote robust risk management and safety and soundness, to reduce systemic risks, and to support the stability of the broader financial system. (b) PURPOSES.The purposes of this subtitle are to
23 mitigate systemic risk in the financial system and promote 24 financial stability by
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186 1 2 3 4 5 6 7 8 9 10 11 12 13 14 (1) authorizing the Board of Governors of the Federal Reserve System to prescribe uniform standards for the management of risks by systemically important financial market utilities and for the conduct of systemically important payment, clearing and settlement activities by financial institutions; (2) providing for appropriate supervision and enforcement of such risk management standards for systemically important financial market utilities and payment, clearing, and settlement activities; and (3) strengthening the liquidity of systemically important financial market utilities.
15 shall apply: 16 17 18 19 20 21 22 23 (1) AFFILIATE.The term affiliate means any company that controls, is controlled by, or is under common control with another company. (2) APPROPRIATE
FINANCIAL REGULATOR.
The term appropriate financial regulator means the following: (A) The Comptroller of the Currency, with respect to
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187 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (i) any national banks or a Federal branch or Federal agency of a foreign bank; and (ii) after the functions of the Director of the Office of Thrift Supervision are transferred under subtitle C, any Federal savings association. (B) the Board of Directors of the Corporation, with respect to (i) any insured State nonmember bank or any insured branch of a foreign bank (other than a Federal branch); and (ii) after the functions of the Director of the Office of Thrift Supervision are transferred under subtitle C, any State savings association. (C) The Director of the Office of Thrift Supervision, with respect to any savings association and any savings and loan holding company, until the functions of the Director of the Office of Thrift Supervision are transferred under subtitle C. (D) The Board, with respect to (i) any State member bank;
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188 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (ii) any branch or agency of a foreign bank (other than any Federal branch, Federal agency, or insured State branch of a foreign bank); (iii) any commercial lending company owned or controlled by a foreign bank; (iv) any organization operating under section 25 or 25A of the Federal Reserve Act (12 U.S.C. 601 et seq. or 611 et seq.); (v) any bank holding company and any nondepository subsidiary of a bank holding company (other than any broker, dealer, investment company, or investment adviser registered with the Securities and Exchange Commission, or any futures commission merchant, commodity trading advisor, or commodity pool operator registered with the Commodity Futures Trading Commission); and (vi) after the functions of the Director of Thrift Supervision are transferred under subtitle C, any savings and loan holding company and any non-depository subsidiary of a savings and loan holding company (other than any broker, dealer, in-
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189 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 vestment company, or investment adviser registered with the Securities and Exchange Commission, or any futures commission merchant, commodity trading advisor, or commodity pool operator registered with the Commodity Futures Trading Commission). (E) The National Credit Union Administration Board, with respect to any insured credit union under the Federal Credit Union Act (12 U.S.C. 1751 et seq.). (F) The Securities and Exchange Commission, with respect to (i) any broker or dealer registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.); (ii) any investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.); and (iii) any investment adviser registered with the Securities and Exchange Commis-
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190 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 sion under the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.). (G) The Commodity Futures Trading Commission, with respect to futures commission merchants, commodity trading advisors, and commodity pool operators registered with the Commodity Futures Trading Commission under the Commodity Exchange Act (7 U.S.C. 1 et seq.). (H) The State insurance authority of the State in which an insurance company is domiciled, with respect to any financial institution engaged in providing insurance under State insurance law. (I) The Board, with respect to any other financial institution engaged in an identified activity. (3) BOARD.The term Board means the Board of Governors of the Federal Reserve System. (4) CORPORATION.The term Corporation means the Federal Deposit Insurance Corporation. (5) FINANCIAL
INSTITUTION.The
term fi-
nancial institution means an entity other than a financial market utility that is
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191 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (A) a depository institution (as defined in section 3 of the Federal Deposit Insurance Act) (12 U.S.C. 1813); (B) 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); (C) an organization operating under section 25 or 25A of the Federal Reserve Act (12 U.S.C. 601 et seq. and 611 et seq.); (D) a credit union (as defined in section 101 of the Federal Credit Union Act) (12 U.S.C. 1752); (E) a broker or dealer (as defined in section 3 of the Securities Exchange Act of 1934) (15 U.S.C. 78c); (F) an investment company (as defined in section 3 of the Investment Company Act of 1940) (15 U.S.C. 80a-3); (G) an insurance company (as defined in section 2 of the Investment Company Act of 1940) (15 U.S.C. 80a-2); (H) an investment adviser (as defined in section 202 of the Investment Advisers Act of 1940) (15 U.S.C. 80b-2);
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192 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (I) 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 (J) 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)). (6) FINANCIAL
MARKET UTILITY.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. (7) IDENTIFIED
ACTIVITY.The
term identi-
fied activity means a payment, clearing, or settlement activity that the Council has identified as systemically important under section 1404. (8) IDENTIFIED
FINANCIAL MARKET UTILITY.
The term identified financial market utility means a financial market utility that the Council has identified as systemically important under section 1404.
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193 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (9) PAYMENT,

TIVITY. CLEARING, OR SETTLEMENT AC-
(A) IN
GENERAL.The
term payment,
clearing, or settlement activity means one of the following activities carried out by one or more financial institutions after the parties to a financial transaction agree to the transaction to facilitate the completion of the financial transaction: the calculation and communication of unsettled financial transactions between financial institutions; netting or aggregating of financial transactions; provision and maintenance of trade, contract, or instrument information; the management of risks associated with unsettled financial transactions; transmittal and storage of payment instructions; movement of funds; final settlement of financial transactions; and other similar activities that the Board may determine by rule or order. Payment, clearing, or settlement activity does not include, among other things, activities inclusive of or prior to trade execution. (B) FINANCIAL
TRANSACTION.For
pur-
poses of subparagraph (A), the term financial transaction means a funds transfer, securities
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194 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 contract, contract of sale of a commodity for future delivery, forward contract, repurchase agreement, swap agreement, foreign exchange contract, financial derivatives contract, and any similar transaction that the Board determines, by rule or order, to be a financial transaction for purposes of this subtitle. (10) PERSON.The term person means any corporation, company, association, firm, partnership, society, joint stock company, or other legal entity other than a natural person. (11) SECRETARY.The term Secretary
means the Secretary of the Treasury. (12) 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. (13) SUPERVISORY
AGENCY.The
term Su-
pervisory Agency means the Federal agency that has primary jurisdiction over an identified financial market utility under Federal banking, securities, or commodity futures laws, including
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195 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (A) the Securities and Exchange Commission, with respect to an identified financial market utility that is a clearing agency registered with the Securities and Exchange Commission; (B) the Commodity Futures Trading Commission, with respect to an identified financial market utility that is a derivatives clearing organization registered with the Commodity Futures Trading Commission; (C) the Board of Directors of the Corporation, with respect to an identified financial market utility that is (i) an insured State nonmember bank or an insured branch of a foreign bank; and (ii) after the functions of the Director of the Office of Thrift Supervision are transferred under subtitle C, a State savings association; (D) the Comptroller of the Currency, with respect to an identified financial market utility that is (i) a national bank or a Federal branch (other than an insured branch) or a Federal agency of a foreign bank; and
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196 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (ii) after the functions of the Director of the Office of Thrift Supervision are transferred under subtitle C, a Federal savings association; (E) the Board, with respect to an identified financial market utility that is (i) a State member bank; (ii) a branch or agency of a foreign bank (other than any Federal branch, Federal agency, or insured State branch of a foreign bank); (iii) a commercial lending company owned or controlled by a foreign bank; (iv) an organization operating under section 25 or 25A of the Federal Reserve Act (12 U.S.C. 601 et seq. or 611 et seq.); (v) a bank holding company and any non-depository subsidiary of a bank holding company (other than any broker, dealer, investment company, or investment adviser registered with the Securities and Exchange Commission, or any futures commission merchant, commodity trading advisor, or commodity pool operator registered
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197 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 with the Commodity Futures Trading Commission); and (vi) after the functions of the Director of the Office of Thrift Supervision are transferred under subtitle C, any savings and loan holding company and any non-depository subsidiary of a savings and loan holding company (other than any broker, dealer, investment company, or investment adviser registered with the Securities and Exchange Commission, or any futures commission merchant, commodity trading advisor, or commodity pool operator registered with the Commodity Futures Trading Commission); and (F) the Director of the Office of Thrift Supervision, with respect to an identified financial market utility that is a savings association or a savings and loan holding company, until the functions of the Director of the Office of Thrift Supervision are transferred under subtitle C. If a financial market utility is subject to supervision by more than one agency listed in paragraphs (A) through (F), and those agencies cannot agree which has primary jurisdiction, the Council shall decide
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198 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 which agency is the Supervisory Agency for purposes of this subtitle. (14) SYSTEMICALLY
IMPORTANCE.The IMPORTANT AND SYSTEMIC
terms systemically important
and systemic importance mean a situation in which 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, credit, or other problems spreading among financial institutions or markets and thereby threaten the stability of the financial system.
SEC. 1404. IDENTIFICATION OF SYSTEMICALLY IMPORTANT FINANCIAL MARKET UTILITIES AND PAY-
MENT, CLEARING, AND SETTLEMENT ACTIVITIES.
(a) IN GENERAL.The Council shall, at its own ini-
18 tiative or at the request of the Board, consider whether 19 to identify a financial market utility or a payment, clear20 ing, or settlement activity as systemically important. 21 (b) CRITERIA
FOR
IDENTIFICATION.The Council
22 shall identify a financial market utility or payment, clear23 ing, or settlement activity if the Council determines that 24 such financial market utility or activity is, or is likely to
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199 1 become, systemically important, based on consideration of 2 the following: 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 (1) The aggregate monetary value of the transactions processed by the financial market utility or carried out through the payment, clearing, or settlement activity. (2) The aggregate exposure of counterparties to the financial market utility. (3) 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. (4) 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. (5) Any other factors that the Council deems appropriate. (c) PERIODIC REVIEW
FICATIONS.The AND
RESCISSION
OF
IDENTI-
Council shall, at its own initiative or at
23 the request of the Board
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200 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A
(1) review periodically whether a financial market utility or a payment, clearing, or settlement activity continues to be systemically important; and (2) rescind identification of a financial market utility or a payment, clearing, or settlement activity that it determines no longer should be identified. (d) PROCEDURE
FOR
IDENTIFYING
OR
RESCINDING
SYSTEMICALLY IMPORTANT IDENTIFICATION. (1) CONSULTATION.Before making any determination under this section, the Council shall consult with the Board, and in the case of a determination regarding identification or rescission of identification of a financial market utility, the Council shall consult with the relevant Supervisory Agency. (2) NOTICE
(A) IN
GENERAL.The
Board shall, in an
executive capacity on behalf of the Council, provide notice to a financial market utility or, in the case of a payment, clearing, or settlement activity, financial institutions, that the Council is considering whether to identify or cease to identify such financial market utility or such payment, clearing, or settlement activity, including an explanation of the basis of the Coun-
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201 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 cils consideration, and provide such financial market utilities or financial institutions 30 days to submit written materials to inform the Councils decision. The Council shall make its decision, and the Board shall notify the financial market utility or financial institutions of the Councils decision, within 60 days of the due date for such written materials. (B) EMERGENCY
EXCEPTION.The
Coun-
cil may waive or modify the requirements of subparagraph (A) if the Council determines that the waiver or modification is necessary or appropriate to prevent or mitigate an immediate threat to financial stability posed by the financial market utility or the payment, clearing, or settlement activity. The Board shall, in an executive capacity on behalf of the Council, notify the financial market utility concerned or, in the case of a payment, clearing, or settlement activity, 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. (3) FORM
OF NOTIFICATION.The
Board shall,
in an executive capacity on behalf of the Council,
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202 1 2 3 4 5 6 7 8 9 10 11 12 13 provide notice of a decision under this section regarding (A) a financial market utility to such financial market utility by order; and (B) a payment, clearing, or settlement activity to financial institutions by posting a notice on the Boards Web site and by publishing a notice in the Federal Register.
SEC. 1405. STANDARDS FOR SYSTEMICALLY IMPORTANT FINANCIAL MARKET UTILITIES AND PAYMENT, CLEARING, OR SETTLEMENT ACTIVITIES.
(a) BOARD REQUIREMENT

ARDS.The
TO
PRESCRIBE STAND-
Board shall, by regulation or order and in
14 consultation with the Council and relevant supervisory 15 agencies, prescribe or issue risk management standards 16 governing the operations of identified financial market 17 utilities and the conduct of identified activities by financial 18 institutions, taking into consideration relevant inter19 national standards and existing prudential requirements 20 applicable to such financial market utilities and payment, 21 clearing, or settlement activities. 22 (b) OBJECTIVES
AND
PRINCIPLES.The objectives
23 and principles for the risk management standards pre24 scribed under subsection (a) shall be to 25 (1) promote robust risk management;
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203 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (2) promote safety and soundness; (3) reduce systemic risks; and (4) support the stability of the broader financial system. (c) SCOPE. (1) IN
GENERAL.The
standards prescribed
under subsection (a) may address areas such as risk management policies and procedures; margin and collateral requirements; participant or counterparty default policies and procedures; the ability to complete timely clearing and settlement of financial transactions; capital and financial resource requirements for identified financial market utilities; and other areas that the Board determines, by rule or order, are necessary to achieve the objectives and principles in subsection (b). (2) INTERACTION
WITH EXISTING STAND-
ARDS.The
standards prescribed under this section
may (A) be different than existing standards that address the same or similar subject areas; and (B) may address subject areas that are not covered by existing regulations.
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204 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 (3) THRESHOLD

LEVEL.The
standards pre-
scribed under subsection (a) governing the conduct of identified activities 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. (4) CATEGORIZATION
AND TIERING.In
pre-
scribing or issuing standards under subsection (a) governing the conduct of identified activities and the operations of identified financial market utilities, the Board shall, where appropriate, differentiate among identified financial market utilities and identified activities by taking into consideration their risk, complexity, leverage, frequency and dollar amount, interconnectedness to the financial system, and any other factors the Board deems appropriate. (d) COMPLIANCE REQUIRED.Identified financial
19 market utilities and financial institutions engaged in iden20 tified activities shall conduct their operations in compli21 ance with the applicable risk management standards pre22 scribed by the Board.
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205 1 2 3 4
SEC. 1406. OPERATIONS AND CHANGES TO RULES, PROCEDURES, OR OPERATIONS OF IDENTIFIED FINANCIAL MARKET UTILITIES.
(a) REFERENCE.For purposes of paragraphs (b)
5 and (c), all references to the phrase Supervisory Agency 6 or the Board mean Supervisory Agency or, in the ab7 sence of a Supervisory Agency, the Board. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
(b) ADVANCE NOTICE OF PROPOSED CHANGES. (1) ADVANCE

NOTICE REQUIRED.Subject
to
subsection (c), an identified financial market utility shall provide at least 60 days advance notice to the Supervisory Agency or the Board of any proposed change to its rules, procedures, or operations that could, as defined in rules of the Board, materially affect the nature or level of risks presented by the identified financial market utility. (2) TERMS
AND STANDARDS PRESCRIBED BY
THE BOARD.The
Board shall prescribe regulations
that define and describe the standards for determining when notice is required to be provided under paragraph (1). (3) CONSULTATION
CATION.In AND AVOIDANCE OF DUPLI-
prescribing regulations under para-
graph (2), the Board shall (A) consult with the Commodity Futures Trading Commission and the Securities and
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206 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Exchange Commission regarding the extent to which the regulations of those agencies already require advance notice of rule, procedural, or operational changes; and (B) seek to avoid duplicative requirements under this section whenever possible. (4) CONTENTS
OF NOTICE.Any
notice of a
proposed change provided by an identified financial market utility under paragraph (1) shall describe (A) the nature of the change; (B) any expected effects on risks to the identified financial market utility, its participants, or the market; and (C) the manner in which the identified financial market utility plans to manage any identified risks. (5) ADDITIONAL
INFORMATION.The
Super-
visory Agency or the Board may require an identified financial market utility to provide any information necessary to assess (A) the effect the proposed change would have on the nature or level of risks associated with the identified financial market utilitys payment, clearing, or settlement activities; and
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207 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (B) the sufficiency of any proposed risk management techniques. (6) NOTICE
OF OBJECTION.The
Supervisory
Agency or the Board will notify the identified financial market utility of any objection regarding the proposed change before the end of the 60-day period beginning on the later of (A) the date that the notice of the proposed change is received; or (B) the date any further information requested for consideration of the notice is received. (7) CHANGE
NOT ALLOWED IF OBJECTION.An
identified financial market utility shall not implement a change to which the Supervisory Agency or Board has an objection. (8) CHANGE
IN 60 DAYS.An ALLOWED IF NO OBJECTION WITH-
identified financial market utility
may implement a change if it has not received an objection to the proposed change before the end of the 60-day period beginning on the later of (A) the date that the Supervisory Agency or the Board receives the notice of proposed change; or
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208 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (B) the date the Supervisory Agency or the Board receives any further information that the Supervisory Agency or the Board requests for consideration of the notice. (9) REVIEW
PLEX ISSUES. EXTENSION FOR NOVEL OR COM-
(A) IN
GENERAL.The
Supervisory Agen-
cy or the Board 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 or the Board providing the identified financial market utility with prompt written notice of the extension. (B) EXTENSION
ODS.Any OF OTHER TIME PERI-
time period referred to under para-
graphs (6) and (8) shall be extended by the amount of any extension of time under clause (A). (10) CHANGE
ALLOWED EARLIER IF NOTIFIED
OF NO OBJECTION.An
identified 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 Board, or
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209 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the date the Supervisory Agency or the Board receives any further information it requested, if (A) the Supervisory Agency or the Board notifies the identified financial market utility in writing that it does not object to the proposed change; and (B) authorizes the identified financial market utility to implement the change on an earlier date, subject to any conditions imposed by the Supervisory Agency or the Board. (c) EMERGENCY CHANGES. (1) IN
GENERAL.An
identified financial mar-
ket utility may implement a change that would otherwise require advance notice under this subsection if it determines that (A) an emergency exists; and (B) immediate implementation of the change is necessary for the identified financial market utility to continue to provide its services in a safe and sound manner. (2) NOTICE
REQUIRED WITHIN 24 HOURS.Any
identified financial market utility that implements a change pursuant to a determination under paragraph (1) shall provide notice of such an emergency change to its Supervisory Agency or the Board as
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210 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 soon as practicable, which shall be no later than 24 hours after implementation of the change. (3) CONTENTS
OF EMERGENCY NOTICE.In
addition to the information required under subsection (b) for any change requiring an advance notice, the notice under paragraph (2) of an emergency change must describe (A) the nature of the emergency; and (B) the reason the change was necessary for the identified financial market utility to continue to provide its services in a safe and sound manner. (4) MODIFICATION
OR RESCISSION OF CHANGE
MAY BE REQUIRED.The
Supervisory Agency or the
Board may require a modification or a rescission of any change of which the Supervisory Agency or the Board receives notice under this subsection if the Supervisory Agency or the Board finds that the change is not consistent with the purposes of this subtitle or any regulations, orders, or standards prescribed, issued, or established by the Board hereunder. (d) COORDINATION BETWEEN AGENCIES
AND THE
24 BOARD.In the case of an identified financial market
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211 1 utility that has a Supervisory Agency other than the 2 Board, the Supervisory Agency shall 3 4 5 6 7 8 9 10 11 12 13 (1) provide the Board concurrently with a complete copy of any notice, request, or other information such agency issues, submits, or receives under this subsection with respect to such utility; and (2) consult with the Board before taking any action on or completing any review of a change proposed by an identified financial market utility.
SEC. 1407. EXAMINATION OF AND ENFORCEMENT ACTIONS AGAINST IDENTIFIED FINANCIAL MARKET
UTILITIES.
(a) EXAMINATION.Notwithstanding any other pro-
14 vision of law and subject to subsection (d), the Supervisory 15 Agency shall conduct examinations of an identified finan16 cial market utility at least annually in order to inform 17 itself of 18 19 20 21 22 23 24 (1) the nature of the operations of, and the risks borne by, the identified financial market utility; (2) the financial and operational risks presented by the identified financial market utility to financial institutions, critical markets, or the broader financial system;
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212 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 (3) the resources and capabilities of the identified financial market utility to monitor and control such risks; (4) the safety and soundness of the identified financial market utility; and (5) the identified financial market utilitys compliance with this subtitle and the rules and orders prescribed by the Board under this subtitle. (b) SERVICE PROVIDERS. (1) Whenever a service integral to the operation of an identified financial market utility is performed for the identified financial market utility by another entity, whether an affiliate or non-affiliate and whether on or off the premises of the identified 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 identified financial market utility were performing the service on its own premises. (c) ENFORCEMENT.Except as provided in sub-
22 sections (e) and (g), an identified financial market utility 23 shall be subject to the provisions of subsections (b) 24 through (n) of section 8 of the Federal Deposit Insurance 25 Act (12 U.S.C. 1818) in the same manner and to the same
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213 1 extent as if the identified financial market utility were an 2 insured depository institution for which the Supervisory 3 Agency is the appropriate Federal banking agency as de4 fined in section 3 of the Federal Deposit Insurance Act 5 (12 U.S.C. 1813). 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (d) BOARD INVOLVEMENT IN EXAMINATIONS. (1) BOARD
PLANNING.The CONSULTATION ON EXAMINATION
Supervisory Agency shall consult
with the Board regarding the scope and methodology of any examination conducted under subsections (a) and (b). (2) BOARD
PARTICIPATION IN EXAMINATION.
The Board may, in its discretion, participate in any examination led by a Supervisory Agency and conducted under subsections (a) and (b). (e) BOARD ENFORCEMENT RECOMMENDATIONS. (1) RECOMMENDATION.The Board may at any time recommend to the Supervisory Agency that it take enforcement action against an identified financial market utility. The recommendation shall be in writing and shall provide a detailed analysis supporting the Boards recommendation. (2) CONSIDERATION.The Supervisory Agency shall consider the Boards recommendation and submit a response to the Board within 30 days.
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214 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 (3) MEDIATION.If the Supervisory Agency rejects, in whole or in the part, the Boards recommendation, then the Council shall mediate between the parties and encourage them to reach agreement on whether an enforcement action should be brought, and if so by which agency. (4) ENFORCEMENT
ACTION.If
the Super-
visory Agency fails to respond to the Boards recommendation in accordance with paragraph (2), if the Supervisory Agency reaches agreement with the Board that the Board should take an enforcement action, or if the Supervisory Agency rejects the Boards recommendation and the Council is unable to resolve the dispute under paragraph (3), then the Board may exercise the enforcement authority referenced in subsection (c) as if it were the Supervisory Agency and take enforcement action against the identified financial market utility. (f) IDENTIFIED FINANCIAL MARKET UTILITIES
A
20 WITHOUT
SUPERVISORY AGENCY.In the case of an
21 identified financial market utility that is not under the pri22 mary jurisdiction of a Supervisory Agency, the Board shall 23 have examination and enforcement authority under sub24 sections (a) through (c) with respect to the identified fi25 nancial market utility and any service providers in the
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215 1 same manner and to the same extent as if the Board were 2 the Supervisory Agency. 3 (g) EMERGENCY ENFORCEMENT ACTIONS
BY THE
4 BOARD. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (1) IMMINENT

RISK OF SUBSTANTIAL HARM.
The Board may, after consulting with the Supervisory Agency, take enforcement action against an identified financial market utility if the Board has reasonable cause to believe that (A) either (i) an action engaged in, or contemplated by, an identified financial market utility (including any change proposed by the identified financial market utility to its rules, procedures, or operations that would otherwise be subject to section 1406(b) or (c)); or (ii) the condition of an identified 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 Boards use of the procedures in subsection (e).
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216 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 (2) ENFORCEMENT

AUTHORITY.The
Board is
authorized to take action under paragraph (1) against an identified financial market utility as if the identified financial market utility were an insured depository institution for which the Board is the appropriate Federal banking agency as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813). (3) PROMPT
NOTICE TO SUPERVISORY AGENCY
OF ENFORCEMENT ACTION.Within
24 hours of
taking an enforcement action under this subsection, the Board shall provide written notice to the identified financial market utilitys Supervisory Agency containing a detailed analysis of the Boards action, with supporting documentation included.
SEC. 1407. EXAMINATION OF AND ENFORCEMENT ACTIONS AGAINST IDENTIFIED FINANCIAL MARKET
UTILITIES.
(a) EXAMINATION.Notwithstanding any other pro-
20 vision of law and subject to subsection (d), the Supervisory 21 Agency shall conduct examinations of an identified finan22 cial market utility at least annually in order to inform 23 itself of
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217 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 (1) the nature of the operations of, and the risks borne by, the identified financial market utility; (2) the financial and operational risks presented by the identified financial market utility to financial institutions, critical markets, or the broader financial system; (3) the resources and capabilities of the identified financial market utility to monitor and control such risks; (4) the safety and soundness of the identified financial market utility; and (5) the identified financial market utilitys compliance with this subtitle and the rules and orders prescribed by the Board under this subtitle. (b) SERVICE PROVIDERS.Whenever a service inte-
17 gral to the operation of an identified financial market util18 ity is performed for the identified financial market utility 19 by another entity, whether an affiliate or nonaffiliate and 20 whether on or off the premises of the identified financial 21 market utility, the Supervisory Agency may examine 22 whether the provision of that service is in compliance with 23 applicable law, rules, orders, and standards to the same 24 extent as if the identified financial market utility were per25 forming the service on its own premises.
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218 1 (c) ENFORCEMENT.Except as provided in sub-
2 sections (e) and (g), an identified financial market utility 3 shall be subject to the provisions of subsections (b) 4 through (n) of section 8 of the Federal Deposit Insurance 5 Act (12 U.S.C. 1818) in the same manner and to the same 6 extent as if the identified financial market utility were an 7 insured depository institution for which the Supervisory 8 Agency is the appropriate Federal banking agency as de9 fined in section 3 of the Federal Deposit Insurance Act 10 (12 U.S.C. 1813). 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (d) BOARD INVOLVEMENT IN EXAMINATIONS. (1) BOARD
PLANNING.The CONSULTATION ON EXAMINATION
Supervisory Agency shall consult
with the Board regarding the scope and methodology of any examination conducted under subsections (a) and (b). (2) BOARD
PARTICIPATION IN EXAMINATION.
The Board may, in its discretion, participate in any examination led by a Supervisory Agency and conducted under subsections (a) and (b). (e) BOARD ENFORCEMENT RECOMMENDATIONS. (1) RECOMMENDATION.The Board may at any time recommend to the Supervisory Agency that it take enforcement action against an identified financial market utility. The recommendation shall be
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219 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 in writing and shall provide a detailed analysis supporting the Boards recommendation. (2) CONSIDERATION.The Supervisory Agency shall consider the Boards recommendation and submit a response to the Board within 30 days. (3) MEDIATION.If the Supervisory Agency rejects, in whole or in the part, the Boards recommendation, then the Council shall mediate between the parties and encourage them to reach agreement on whether an enforcement action should be brought, and if so by which agency. (4) ENFORCEMENT
ACTION.If
the Super-
visory Agency fails to respond to the Boards recommendation in accordance with paragraph (2), if the Supervisory Agency reaches agreement with the Board that the Board should take an enforcement action, or if the Supervisory Agency rejects the Boards recommendation and the Council is unable to resolve the dispute under paragraph (3), then the Board may exercise the enforcement authority referenced in subsection (c) as if it were the Supervisory Agency and take enforcement action against the identified financial market utility. (f) IDENTIFIED FINANCIAL MARKET UTILITIES
A
25 WITHOUT
SUPERVISORY AGENCY.In the case of an
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220 1 identified financial market utility that is not under the pri2 mary jurisdiction of a Supervisory Agency, the Board shall 3 have examination and enforcement authority under sub4 sections (a) through (c) with respect to the identified fi5 nancial market utility and any service providers in the 6 same manner and to the same extent as if the Board were 7 the Supervisory Agency. 8 (g) EMERGENCY ENFORCEMENT ACTIONS
BY THE
9 BOARD. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (1) IMMINENT

RISK OF SUBSTANTIAL HARM.
The Board may, after consulting with the Supervisory Agency, take enforcement action against an identified financial market utility if the Board has reasonable cause to believe that (A) either (i) an action engaged in, or contemplated by, an identified financial market utility (including any change proposed by the identified financial market utility to its rules, procedures, or operations that would otherwise be subject to section 1406(b) or (c)); or (ii) the condition of an identified financial market utility, poses an imminent risk of substantial harm to financial insti-
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221 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 tutions, critical markets, or the broader financial system; and (B) the imminent risk of substantial harm precludes the Boards use of the procedures in subsection (e). (2) ENFORCEMENT
AUTHORITY.The
Board is
authorized to take action under paragraph (1) against an identified financial market utility as if the identified financial market utility were an insured depository institution for which the Board is the appropriate Federal banking agency as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813). (3) PROMPT
NOTICE TO SUPERVISORY AGENCY
OF ENFORCEMENT ACTION.Within
24 hours of
taking an enforcement action under this subsection, the Board shall provide written notice to the identified financial market utilitys Supervisory Agency containing a detailed analysis of the Boards action, with supporting documentation included.
SEC. 1408. EXAMINATION OF AND ENFORCEMENT ACTIONS AGAINST FINANCIAL INSTITUTIONS SUBJECT TO STANDARDS FOR IDENTIFIED ACTIVITIES.
(a) EXAMINATION.The appropriate financial regu-
25 lator shall periodically conduct examinations of a financial
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222 1 institution that is subject to the standards prescribed by 2 the Board for an identified activity in order to inform the 3 appropriate financial regulator of the following: 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 (1) the nature and scope of the identified activities engaged in by the financial institution; (2) the financial and operational risks the identified 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 identified 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); and (5) the financial institutions compliance with this subtitle and the rules and orders prescribed by the Board under this subtitle. (b) ENFORCEMENT.The appropriate financial regu-
22 lator shall take such actions that it deems necessary to 23 ensure that a financial institution that is subject to the 24 standards prescribed by the Board for an identified activ-
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223 1 ity complies with this subtitle and the rules and orders 2 prescribed by the Board under this subtitle. 3 (c) TECHNICAL ASSISTANCE.The Board shall con-
4 sult with and provide such technical assistance as may be 5 required by the appropriate financial regulators to ensure 6 that the Boards rules and orders prescribed under this 7 subtitle are interpreted and applied in as consistent and 8 uniform a manner as practicable. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (d) DELEGATION. (1) EXAMINATION. (A) REQUEST
TO BOARD.The
appro-
priate financial regulator may request the Board to conduct, or to participate in, an examination of a financial institution subject to the standards prescribed by the Board for an identified activity in order to assess the financial institutions compliance with this subtitle or the Boards rules or orders prescribed under this subtitle. (B) EXAMINATION
BY BOARD.Upon
re-
ceipt of an appropriate written request, the Board will conduct the examination under such terms and conditions to which the Board and the appropriate financial regulator mutually agree.
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224 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (2) ENFORCEMENT. (A) REQUEST

TO BOARD.An
appropriate
financial regulator may request the Board to enforce this subtitle or the rules or orders prescribed by the Board under this subtitle against a financial institution subject to the standards prescribed by the Board for an identified activity. (B) ENFORCEMENT
BY BOARD.Upon
re-
ceipt of an appropriate written request, the Board shall (i) determine whether an enforcement action is warranted; and, (ii) if so, it shall enforce compliance with this subtitle or the rules or orders prescribed by the Board under this subtitle (C) ENFORCEMENT
AUTHORITY.For
pur-
poses of carrying out subparagraph (B), the Board shall have authority under subsections (b) through (n) of section 8 of the Federal Deposit Insurance Act with respect to a financial institution in the same manner and to the same extent as if the financial institution were an insured depository institution for which the Board
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225 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 is the appropriate Federal banking agency (as defined in section 3 of such Act). (e) BACK-UP AUTHORITY OF THE BOARD. (1) EXAMINATION
AND ENFORCEMENT.Not-
withstanding any other provision of law, the Board may (A) conduct an examination of any financial institution that is subject to the standards prescribed by the Board for an identified activity; and (B) enforce the provisions of this subtitle or any rules or orders prescribed by the Board under this subtitle against any financial institution subject to the standards prescribed by the Board for an identified activity. (2) LIMITATIONS. (A) EXAMINATION.The Board may exercise the authority described in paragraph (1)(A) only if the Board has (i) reasonable cause to believe that a financial institution is not in compliance with this subtitle or the rules or orders prescribed by the Board under this subtitle with respect to an identified activity;
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226 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (ii) notified, in writing, the appropriate financial regulator 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; and (iv) either (I) 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 Boards notification under clause (ii); or (II) reasonable cause to believe that the financial institutions noncompliance with this subtitle or the rules or orders prescribed by the Board under this subtitle poses a substantial risk to other financial institutions, critical markets, or the broader financial system, subject to the Board affording the appropriate financial
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227 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 regulator a reasonable opportunity to participate in the examination. (B) ENFORCEMENT.The Board may exercise the authority described in paragraph (1)(B) only if the Board has (i) reasonable cause to believe that a financial institution is not in compliance with this subtitle or the rules or orders prescribed by the Board under this subtitle with respect to an identified activity; (ii) notified, in writing, the appropriate financial regulator of its belief under clause (i) with supporting documentation included and with a recommendation that the appropriate financial regulator take one or more specific enforcement actions against the financial institution; and (iii) either (I) not been notified, in writing, by the appropriate financial regulator of the commencement of an enforcement action recommended by the Board against the financial institution within 30 days from the date of the notification under clause (ii); or
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228 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (II) reasonable cause to believe that the financial institutions noncompliance with this subtitle or the rules or orders prescribed by the Board under this subtitle poses a substantial risk to other financial institutions, critical markets, or the broader financial system, subject to the Board notifying the appropriate financial regulator of the Boards enforcement action. (3) ENFORCEMENT
PROVISIONS.The
Board
shall have authority under subsections (b) through (n) of section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) with respect to a financial institution subject to the standards prescribed by the Board for an identified activity in the same manner and to the same extent as if the financial institution were an insured depository institution for which the Board is the appropriate Federal banking agency (as defined in section 3 of such Act).
SEC. 1409. PROVISION OF INFORMATION, REPORTS, OR RECORDS.
(a) INFORMATION
TANCE.
TO
ASSESS SYSTEMIC IMPOR-
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229 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (1) FINANCIAL

MARKET UTILITIES.The
Coun-
cil is authorized to require any financial market utility to submit such information as the Council may require for the purpose of assessing whether that financial market utility is systemically important if the Council has reasonable cause to believe that the financial market utility meets the standards for systemic importance set out in section 1404 of this subtitle. (2) FINANCIAL
INSTITUTIONS ENGAGED IN PAY-
MENT, CLEARING, OR SETTLEMENT ACTIVITIES.
The Council is authorized to require any financial institution to submit such information as the Council may require for the purpose of assessing whether any payment, clearing, or settlement activity engaged in or supported by a financial institution is systemically important if the Council has reasonable cause to believe that the activity meets the standards for systemic importance set out in section 1404 of this subtitle. (b) REPORTING AFTER IDENTIFICATION. (1) IDENTIFIED
TIES.The FINANCIAL MARKET UTILI-
Board may require an identified finan-
cial market utility to submit reports or data to the Board in such frequency and form as deemed nec-
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230 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 essary by the Board in order to assess the safety and soundness of the utility and the systemic risk that the utilitys operations pose to the financial system. (2) FINANCIAL
STANDARDS INSTITUTIONS SUBJECT TO THE BY THE BOARD.The
PRESCRIBED
Board may require 1 or more financial institutions subject to the standards prescribed by the Board for an identified activity to submit, in such frequency and form as deemed necessary by the Board, reports and data to the Board solely with respect to the conduct of the identified activity and solely to assess whether (A) any regulation, order, standard, or guideline prescribed by the Board with respect to the identified activity appropriately address the risks to the financial system presented by such activity; and (B) the financial institutions are in compliance with this subtitle and the rules and orders prescribed by the Board under this subtitle with respect to the identified activity. (c) COORDINATION WITH APPROPRIATE FEDERAL
24 SUPERVISORY AGENCY.
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231 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 (1) ADVANCE

COORDINATION.Before
directly
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 Council and the Board 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 Council or the Board. (2) SUPERVISORY
REPORTS.Notwithstanding
any other provision of law, the Supervisory Agencies, the appropriate financial regulators, the Council, and the Board are authorized to disclose to each other a copy of the relevant portion of any examination report or similar report regarding any financial market utility or any financial institution engaged in payment, clearing, or settlement activities. (d) TIMING
ERAL OF
RESPONSE FROM APPROPRIATE FED-
SUPERVISORY AGENCY.If the information, report,
23 records, or data requested by the Council or the Board 24 under subsection (c)(1) are not provided in full by the Su25 pervisory Agency or the appropriate financial regulator
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232 1 within 30 days after the date on which the material is 2 requested, the Council or the Board may request the infor3 mation or impose recordkeeping or reporting requirements 4 directly on such persons as provided in subsections (a) and 5 (b) with notice to the Supervisory Agency or the appro6 priate financial regulator. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (e) SHARING OF INFORMATION. (1) MATERIAL
CONCERNS.Notwithstanding
any other provision of law, the Council, the Board, the appropriate financial regulator, and any Supervisory Agency are authorized to (A) promptly notify each other of material concerns about an identified financial market utility or any financial institution subject to the standards prescribed by the Board for an identified activity; and (B) share appropriate reports, information or data relating to such concerns. (2) OTHER.Notwithstanding any other provision of law, the Council or the Board may, under such terms and conditions it deems appropriate and subject to reasonable assurances of confidentiality, provide confidential supervisory information and other information obtained under this subtitle to other persons it deems appropriate, including the
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233 1 2 3 4 Secretary, State financial institution supervisory agencies, foreign financial supervisors, foreign central banks, and foreign finance ministries. (f) PRIVILEGE MAINTAINED.The Council, the
5 Board, the appropriate financial regulator, the Super6 visory Agency, and any financial market utility or finan7 cial institution providing reports or data under this section 8 shall not be deemed to have waived any privilege applicable 9 to those reports or data, or any portion thereof, by pro10 viding the reports or data to the other party or by permit11 ting the reports or data, or any copies thereof, to be used 12 by the other party. 13 14 15 16 17 18 19 20 21 22 23 24 (g) DISCLOSURE EXEMPTION. (1) IN
GENERAL.Information
obtained by the
Board under this section and any materials prepared by the Board in connection with its supervision of identified financial market utilities and identified activities, shall be confidential supervisory information exempt from disclosure under section 552 of title 5, United States Code. (2) For purposes of section 552 of title 5, United States Code, this subsection shall be considered a statute described in subsection (b)(3) of section 552.
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234 1 2
SEC. 1410. RULEMAKING.
The Board is authorized to prescribe such rules and
3 issue such orders as may be necessary to administer and 4 carry out the purposes of this subtitle and prevent eva5 sions thereof. 6 7
SEC. 1411. OTHER AUTHORITY.
The authorities granted to agencies under this sub-
8 title are in addition to any rulemaking, examination, en9 forcement, or other authorities that those agencies may 10 have under other law and in no way shall be construed 11 to limit such other authority, except that any standards 12 imposed by the Board under section 1405 shall supersede 13 any less stringent requirements established under other 14 authority to the extent of any conflict. 15 16 17 18 19 20 21
SEC. 1412. EFFECTIVE DATE.
This subtitle is effective as of the date of enactment.
Subtitle FImprovements to the Asset-Backed Securitization Process

This subtitle may be cited as the Credit Risk Reten-
22 tion Act of 2009. 23 24

SEC. 1502. CREDIT RISK RETENTION.
The Securities Act of 1933 (15 U.S.C. 77a et seq.)
25 is amended by inserting after section 28 the following new 26 section:

235 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
SEC. 29. CREDIT RISK RETENTION.
(a) IN GENERAL. (1) INTEREST

TORS.Within IN LOANS MADE BY CREDI-
180 days of the date of the enact-
ment of this section, the Federal banking agencies and the Commission shall jointly prescribe regulations to require any creditor that makes a loan to retain an economic interest in a material portion of the credit risk of any such loan that the creditor transfers, sells, or conveys to a third party, including for the purpose of including such loan in a pool of loans backing an issuance of asset-backed securities. (2) INTEREST
IN ASSETS BACKING
ASSETBACKED SECURITIES.The
Federal banking
agencies and the Commission shall prescribe regulations to require any securitizer of asset-backed securities that are backed by assets not described in paragraph (1) to retain an economic interest in a material portion of any such asset used to back an issuance of securities. (b) ALTERNATIVE RISK RETENTION
FOR
CREDIT
22 SECURITIZERS.The Federal banking agencies and the 23 Commission may jointly apply the risk retention require24 ments of this section to securitizers of loans or particular 25 types of loans in addition to or in substitution for any 26 or all of the requirements that apply to creditors that
236 1 make such loans or types of loans, if the agencies jointly 2 determine that applying the requirements to such 3 securitizers would 4 5 6 7 8 9 10 11 12 (1) be consistent with helping to ensure high quality underwriting standards for creditors, taking into account other applicable laws, regulations, and standards; and (2) facilitate appropriate risk management practices by such creditors, improve access of consumers to credit on reasonable terms, or otherwise serve the public interest. (c) STANDARDS
FOR
REGULATION.Regulations
13 prescribed under subsections (a) and (b) shall 14 15 16 17 18 19 20 21 22 23 24 25 (1) prohibit a creditor or securitizer from directly or indirectly hedging or otherwise transferring the credit risk such creditor or securitizer is required to retain under the regulations; (2) require a creditor or securitizer to retain 10 percent of the credit risk on any loan that is transferred, sold, or conveyed by such creditor or securitized by such securitizer except (A) if the Federal banking agencies and the Commission determine the credit underwriting by the creditor or the due diligence by the securitizer meets such standards as the
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237 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Federal banking agencies and the Commission shall specify, the percentage of risk retention may be less than 10 percent of the credit risk, but in no case less than 5 percent of credit risk; and (B) if the Federal banking agencies and the Commission determine the underwriting by the creditor or due diligence by the securitizer is insufficient, the percentage of risk retention may be higher than 10 percent; (3) specify that the credit risk retained must be no less at risk for loss than the average of the credit risk not so retained; and (4) set the minimum duration of the required risk retention. (d) EXEMPTIONS AND ADJUSTMENTS. (1) IN
GENERAL.The
Federal banking agen-
cies and the Commission shall have authority to jointly provide exemptions or adjustments to the requirements of this section, including exemptions or adjustments relating to the 10 percent risk retention threshold and the hedging prohibition. (2) APPLICABLE
STANDARDS.Any
exemp-
tions or adjustments provided under paragraph (1) shall
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238 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (A) be consistent with the purpose of ensuring high quality underwriting standards for creditors, taking into account other applicable laws, regulations, or standards; and (B) facilitate appropriate risk management practices by such creditors, improve access for consumers to credit on reasonable terms, or otherwise serve the public interest. (e) ENFORCEMENT. (1) Compliance with the requirements imposed under this subchapter shall be enforced under (A) section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818), in the case of (i) national banks, and Federal branches and Federal agencies of foreign banks, by the Office of the Comptroller of the Currency; (ii) 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
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239 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 section 25 or 25(a) of the Federal Reserve Act (12 U.S.C. 601 et seq., 611 et seq.), bank holding companies, and subsidiaries of bank holding companies (other than insured depository institutions), by the
Board; and (iii) banks insured by the Federal Deposit Insurance Corporation (other than members of the Federal Reserve System) and insured State branches of foreign banks, by the Board of Directors of the Federal Deposit Insurance Corporation; (B) section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818), by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation and a savings and loan holding company and to any subsidiary (other than a bank or subsidiary of that bank); and (C) the Federal Credit Union Act (12 U.S.C. 1751 et seq.), by the National Credit Union Administration Board with respect to any Federal credit union.
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240 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (2) Except to the extent that enforcement of the requirements imposed under this subchapter is specifically committed to some other Government agency under subparagraph (1), the Commission shall enforce such requirements. (3) The authority of the Commission under this section shall be in addition to its existing authority to enforce the securities laws. (f) DEFINITIONS.For purposes of this section: (1) The term asset-backed security has the meaning given such term in section 229.1101(c) of title 17, Code of Federal Regulations, or any successor thereto. (2) The term Federal banking agencies means the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Deposit Insurance Corporation. (3) The term insured depository institution has the meaning given such term in section 3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)). (4) The term securitization vehicle means a trust, corporation, partnership, limited liability entity, special purpose entity, or other structure that
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241 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 (A) is the issuer, or is created by the issuer, of pass-through certificates, participation certificates, asset-backed securities, or other similar securities backed by a pool of assets that includes loans; and (B) holds such loans. (5) The term securitizer means the person that transfers, conveys, or assigns, or causes the transfer, conveyance, or assignment of, loans, including through a special purpose vehicle, to any securitization vehicle, excluding any trustee that holds such loans for the benefit of the securitization vehicle..
SEC. 1503. PERIODIC AND OTHER REPORTING UNDER THE SECURITIES EXCHANGE ACT OF 1934 FOR ASSET-BACKED SECURITIES.
Section 15(d) of Securities Exchange Act of 1934 (15
18 U.S.C. 78o(d)) is amended 19 20 21 22 23 24 25 (1) by inserting , other than securities of any class of asset-backed security (as defined in section 229.1101(c) of title 17, Code of Federal Regulations, or any successor thereto), after securities of each class; (2) by inserting at the end the following: The Commission may by rules and regulations provide
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242 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 for the suspension or termination of the duty to file under this subsection for any class of issuer of assetbacked security upon such terms and conditions and for such period or periods as it deems necessary or appropriate in the public interest or for the protection of investors. The Commission may, for the purposes of this subsection, classify issuers and prescribe requirements appropriate for each class of issuer of asset-backed security.; and (3) by inserting after the fifth sentence the following: 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. In adopting regulations under this subsection, the Commission shall 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. The Commission shall require issuers of asset-backed securities at a minimum to disclose asset-level or loan-level data necessary for investors to independently perform due diligence. Asset-level or loan-level data shall include data with unique identifiers relating to
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243 1 2 3 4 5 6 7 8 loan brokers or originators, the nature and extent of the compensation of the broker or originator of the assets backing the security, and the amount of risk retention of the originator or the securitizer of such assets..
SEC. 1504. REPRESENTATIONS AND WARRANTIES IN ASSETBACKED OFFERINGS.
The Commission shall prescribe regulations on the
9 use of representations and warranties in the asset-backed 10 securities market that 11 12 13 14 15 16 17 18 19 20 21 22 23 (1) require credit rating agencies to include in reports accompanying credit ratings a description of the representations, warranties, and enforcement mechanisms available to investors and how they differ from representations, warranties, and enforcement mechanisms in similar issuances; and (2) require disclosure on fulfilled repurchase requests across all trusts aggregated by originator, so that investors may identify asset originators with clear underwriting deficiencies.
SEC. 1505. EXEMPTED TRANSACTIONS UNDER THE SECURITIES ACT OF 1933.
(a) IN GENERAL.Section 4 of the Securities Act of
24 1933 (15 U.S.C. 77d) is amended 25 (1) by striking paragraph (5); and
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244 1 2 3 (2) by redesignating paragraph (6) as paragraph (5). (b) CONFORMING AMENDMENT.Section
4 3(a)(4)(B)(vii)(I) of the Securities Exchange Act of 1934 5 (15 U.S.C. 78c(a)(4)(B)(vii)(I)) is amended by striking 6 4(6) and inserting 4(5). 7 8 9 10
Subtitle GEnhanced Resolution Authority

This subtitle may be cited as the Resolution Author-
11 ity for Large, Interconnected Financial Companies Act of 12 2009. 13 14

15 shall apply: 16 17 18 19 20 21 22 23 24 25 (1) APPROPRIATE

FEDERAL REGULATORY
AGENCY.
(A) CORPORATION
AND COMMISSION.The
term appropriate Federal regulatory agency means (i) the Corporation; and (ii) the Commission, if the financial company, or an affiliate thereof, is a broker or dealer registered with the Commission under section 15(b) of the Securi-
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245 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ties Exchange Act of 1934 (15 U.S.C. 78o(b) (other than an insured depository institution)). (B) RULES
OF CONSTRUCTION.More
than 1 agency may be an appropriate Federal regulatory agency with respect to any given financial company. In such instances, the Commission shall be the appropriate Federal regulatory agency for purposes of section 1603 if the largest subsidiary of the financial company is a broker or dealer as measured by total assets as of the end of the previous calendar quarter, and otherwise the Corporation shall be the appropriate Federal regulatory agency for purposes of section 1603. (2) BRIDGE
FINANCIAL COMPANY.The
term
bridge financial company means a new financial company organized in accordance with section 1609(h) by the Corporation. (3) COMMISSION.The term Commission means the Securities and Exchange Commission. (4) CORPORATION.The term Corporation means the Federal Deposit Insurance Corporation. (5) COVERED
FINANCIAL COMPANY.The
term
covered financial company means a financial com-
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246 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 pany for which a determination has been made pursuant to and in accordance with section 1603(b). (6) COVERED
SUBSIDIARY.The
term covered
subsidiary means a subsidiary covered in paragraph (9)(B)(iv) of this section. (7) CUSTOMER
PROPERTY.The
term cus-
tomer property has the meaning ascribed to it in the Securities Investor Protection Act of 1970. (8) FEDERAL
RESERVE BOARD.The
term
Federal Reserve Board means the Board of Governors of the Federal Reserve System. (9) FINANCIAL
COMPANY.The
term financial
company means any company that (A) is incorporated or organized under Federal law or the laws of any State and (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) any identified financial holding company, as defined in section 1000(b)(5), that has been subjected to heightened prudential regulation; (iii) any company predominantly engaged in activities that are financial in na-
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247 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ture or incidental thereto for purposes of section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)) or that have been identified for heightened prudential standards under section 1106 of this title; or (iv) any subsidiary of companies described in clauses (i) through (iii) (other than an insured depository institution, any broker or dealer registered with the Commission under section 15(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)) that is a member of the Securities Investor Protection Corporation, or an insurance company). (10) FUND.The term Fund means the Systemic Resolution Fund established in accordance with section 1609(n). (11) IDENTIFIED
PANY.The FINANCIAL HOLDING COM-
term identified financial holding com-
pany means a financial company that is subject to heightened prudential standards, as defined in section 1000(b)(5) of this Act. (12) INSURANCE
COMPANY.The
term insur-
ance company means a domestic insurance com-
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248 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 pany, as that term is defined for purposes of title 11 of the United States Code. (13) SECRETARY.The term Secretary shall mean the Secretary of the Treasury. (14) 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, and the United States Virgin Islands. (15) CERTAIN
OTHER TERMS.The
terms af-
filiate, company, control, deposit, depository institution, foreign bank, insured depository institution, and subsidiary have the same meanings as in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).
SEC. 1603. SYSTEMIC RISK DETERMINATION.
(a) WRITTEN RECOMMENDATION

AND THE
OF THE
FEDERAL
19 RESERVE BOARD 20 21 22 23 24 25
ULATORY
APPROPRIATE FEDERAL REG-
AGENCY. (1) VOTE

REQUIRED.At
the request of the
Secretary or the Chairman of the Federal Reserve Board or, in cases where an financial company has a broker or dealer as its largest subsidiary as measured by total assets as of the end of the previous
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249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 calendar quarter, the Commission, the Federal Reserve Board and the appropriate Federal regulatory agency shall, or on their own initiative the Federal Reserve Board and the appropriate Federal regulatory agency may, consider whether to make the written recommendation provided for in paragraph (2) with respect to a financial company that is an identified financial holding company, which recommendation shall be made upon a vote of not less than two-thirds of the members of the Federal Reserve Board then serving and two-thirds of the members of the board or of the commission then serving of the appropriate Federal regulatory agency, as applicable. (2) RECOMMENDATION
REQUIRED.Any
writ-
ten recommendations made by the Federal Reserve Board and the appropriate Federal regulatory agency under paragraph (1) shall contain the following: (A) A description of the effect that the default of the identified financial holding company would have on economic conditions or financial stability in the United States. (B) A recommendation regarding the nature and the extent of actions that the Board and the appropriate Federal regulatory agency
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250 1 2 3 4 recommend be taken under section 1604 regarding the identified financial holding company. (b) DETERMINATION BY THE SECRETARY.Notwith-
5 standing any other provision of Federal law or the law 6 of any State, if, upon the written recommendation of the 7 Federal Reserve Board and the board of directors or com8 mission of the appropriate Federal regulatory agency as 9 provided for in subsection (a)(1), the Secretary (in con10 sultation with the President) determines that 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (1) the identified financial holding company is in default or is in danger of default; (2) the failure of the identified financial holding company and its resolution under otherwise applicable Federal or State law would have serious adverse effects on financial stability or economic conditions in the United States; and (3) any action under section 1604 would avoid or mitigate such adverse effects, taking into consideration the effectiveness of the action in mitigating potential adverse effects on the financial system or economic conditions, the cost to the general fund of the Treasury, and the potential to increase moral hazard on the part of creditors, counterparties, and
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251 1 2 shareholders in the identified financial holding company,
3 then the Secretary must take action under section 4 1604(a), the Corporation must act in accordance with sec5 tion 1604(b), and the Corporation may take one or more 6 actions specified in section 1604(c) in accordance with the 7 requirements of that subsection. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (c) DOCUMENTATION AND REVIEW. (1) IN
GENERAL.The
Secretary shall
(A) document any determination under subsection (b); and, (B) retain the documentation for review under paragraph (2). (2) GAO
REVIEW.The
Comptroller General of
the United States shall review and report to the Congress on any determination under subsection (b), including (A) the basis for the determination; (B) the purpose for which any action was taken pursuant thereto; and (C) the likely effect of the determination and such action on the incentives and conduct of identified financial holding companies and their creditors, counterparties, and share-
holders.
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252 1 2 3 4 5 6 7 8 9 (3) REPORT

TO CONGRESS.Within
30 days
after a determination is made under subsection (b), the Secretary shall provide written notice of the determination to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives. The notice shall include a description of the basis for the determination. (d) DEFAULT
OR IN
DANGER
OF
DEFAULT.For
10 purposes of subsection (b), an identified financial holding 11 company shall be considered to be in default or in danger 12 of default if any of the following conditions exist, as deter13 mined in accordance with that subsection: 14 15 16 17 18 19 20 21 22 23 24 25 (1) A case has been, or likely will promptly be, commenced with respect to the identified financial holding company under title 11, United States Code. (2) The identified financial holding company is critically undercapitalized, as such term has been or may be defined by the Federal Reserve Board. (3) The identified financial holding 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 without assistance under section 1604.
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253 1 2 3 4 5 6 7 8 9 (4) The identified financial holding companys assets are, or are likely to be, less than its obligations to creditors and others. (5) The identified financial holding 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.
SEC. 1604. RESOLUTION; STABILIZATION.
(a) APPOINTMENT
OF
RECEIVER.Upon the Sec-
10 retary making a determination in accordance with section 11 1603(b), the Secretary shall appoint the Corporation as 12 receiver or qualified receiver for the covered financial com13 pany. There shall be a strong presumption that the Sec14 retary will appoint the Corporation as receiver. The pre15 sumption may be overcome only if the Secretary, the Fed16 eral Reserve Board, and the Corporation agree that the 17 appointment of a qualified receiver is necessary to avoid 18 or mitigate serious adverse effects on financial stability. 19 (b) CONSULTATION.The Corporation, as receiver or
20 qualified receiver 21 22 23 24 (1) shall consult with the regulators of the covered financial company and its covered subsidiaries for purposes of ensuring an orderly resolution of the covered financial company;
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254 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 (2) may consult with, or under section
1609(a)(1)(B)(v) or section 1609(a)(1)(K) acquire services of, any outside experts as appropriate to inform and aid the Corporation in the resolution process; and (3) shall consult with the primary regulators of any subsidiaries of the covered financial company that are not covered subsidiaries as described in section 1602(9)(B)(iv) 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. (c) EMERGENCY STABILIZATION AFTER APPOINTMENT OF
RECEIVER
OR
QUALIFIED RECEIVER.Upon
16 the Secretary appointing the Corporation as receiver or 17 qualified receiver under subsection (a), the Corporation 18 may, in its corporate capacity and as an agency of the 19 United States, with the approval of the Secretary and sub20 ject to the conditions in subsections (d) through (e), take 21 the following actions under such terms and conditions that 22 the Corporation and the Secretary jointly deem appro23 priate:
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255 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (1) Making loans to, or purchasing any debt obligation of, the covered financial company or any covered subsidiary. (2) Purchasing 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 one or more third parties. (4) Acquiring any type of equity interest or security of the covered financial company or any covered subsidiary. (5) 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 company or any covered subsidiary to secure repayment of any transactions conducted under this subsection. (6) Selling or transferring all, or any part thereof, of such acquired assets, liabilities, obligations, equity interests or securities of the covered financial company or any covered subsidiary. (d) MANDATORY TERMS
AND
CONDITIONS
FOR
ALL
25 STABILIZATION ACTIONS.The Corporation as receiver or
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256 1 qualified receiver is authorized to take the stabilization ac2 tions listed in subsection (c) only if 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 (1) the Secretary and the Corporation determine that such action is necessary for the purpose of financial stability and not for the purpose of preserving the covered financial company; (2) the Corporation ensures that the shareholders of a covered financial company do not receive payment until after all other claims are fully paid; (3) the Corporation ensures that unsecured creditors bear losses; and (4) the Corporation ensures 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 the Corporation is appointed as receiver or qualified receiver). (e) RECOUPMENT
TEMIC OF
FUNDS EXPENDED
FOR
SYS-
STABILIZATION PURPOSES.Amounts expended
21 from the Fund by the Corporation under this section shall 22 be repaid in full to the Fund from the following sources: 23 24 (1) RESOLUTION utable to
PROCESS.Amounts
attrib-
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257 1 2 3 4 5 6 7 8 9 10 11 12 13 (A) the proceeds of the sale of, or income from, the assets of the covered financial company; and (B) the proceeds of the transfer of any securities obtained under subsection (c); and (2) INDUSTRY
ASSESSMENTS.If
the sources
described in paragraph (1) are insufficient to repay the amount of the stabilization action in full, the difference shall be recouped through assessments on financial companies in accordance with section 1609(o).
SEC. 1605. JUDICIAL REVIEW.
If a receiver or qualified receiver is appointed, the
14 covered financial company may, not later than 30 days 15 thereafter, bring an action in the United States district 16 court for the judicial district in which the home office of 17 such covered financial company is located, or in the United 18 States District Court for the District of Columbia, for an 19 order requiring that the receiver or qualified receiver be 20 removed, and the court shall, upon the merits, dismiss 21 such action or direct the receiver or qualified receiver to 22 be removed. Review of such an action shall be limited to 23 the appointment of a receiver or qualified receiver under 24 section 1604.
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258 1 2 3 4
SEC. 1606. DIRECTORS NOT LIABLE FOR ACQUIESCING IN APPOINTMENT OF RECEIVER OR QUALIFIED RECEIVER.
The members of the board of directors (or body per-
5 forming similar functions) of a covered financial company 6 shall not be liable to the covered financial companys 7 shareholders or creditors for acquiescing in or consenting 8 in good faith to 9 10 11 12 13 14 15 16 (1) the Secretarys appointment of the Corporation as receiver or qualified receiver for the covered financial company under section 1604; or (2) an acquisition, combination, or transfer of assets or liabilities under section 1609.
SEC. 1607. TERMINATION AND EXCLUSION OF OTHER ACTIONS.
The Corporations acting as receiver or qualified re-
17 ceiver for a covered financial company under this title 18 shall immediately, and by operation of law, terminate any 19 case commenced with respect to the covered financial com20 pany under title 11, United States Code, or any pro21 ceeding under any State insolvency law with respect to the 22 covered financial company, and no such case or proceeding 23 may be commenced with respect to the covered financial 24 company at any time while the Corporation acts as re25 ceiver or qualified receiver for the covered financial com26 pany.
259 1 2
SEC. 1608. RULEMAKING.
The Corporation may prescribe such rules or regula-
3 tions it considers necessary or appropriate to implement 4 the provisions of this title. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

SEC. 1609 POWERS AND DUTIES OF CORPORATION.
(a) POWERS AND AUTHORITIES. (1) GENERAL

POWERS. TO COVERED FINANCIAL
(A) SUCCESSOR
COMPANY.The
Corporation shall, upon ap-
pointment as receiver or qualified receiver for a covered financial company under section 1604, and by operation of law, succeed to (i) all rights, titles, powers, and privileges of the covered financial company, and of any stockholder, member, officer, or director of such institution with respect to the covered financial company and the assets of the covered financial company; and (ii) title to the books, records, and assets of any previous receiver or other legal custodian of such covered financial company. (B) OPERATE
COMPANY.The THE COVERED FINANCIAL
Corporation as receiver or
qualified receiver for a covered financial company may

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260 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (i) take over the assets of and operate the covered financial company with all 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 due the covered financial company; (iii) perform all functions of the covered financial company in the name of the covered financial company; (iv) preserve and conserve the assets and property of the covered financial company; and (v) provide by contract for assistance in fulfilling any function, activity, action, or duty of the Corporation as receiver or qualified receiver. (C) FUNCTIONS
OF COVERED FINANCIAL
COMPANYS OFFICERS, DIRECTORS, AND SHAREHOLDERS.
(i) IN
GENERAL.The
Corporation
may provide for the exercise of any function by any member or stockholder, director, or officer of any covered financial com-
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261 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 pany for which the Corporation has been appointed as receiver or qualified receiver under this section. (ii) PRESUMPTION.There shall be a strong presumption that the Corporation, as receive or qualified receiver, will remove management responsible for the failed condition of the covered financial company (if such management has not already been removed at the time the Corporation is appointed as receiver or qualified receiver). (D) POWERS
OF AND DURATION AS QUALI-
FIED RECEIVER.
(i) IN
GENERAL.The
Corporation
may, as qualified receiver, and subject to all legally enforceable and perfected security interests in the assets of the covered financial company, take such action as may be (I) necessary to put the covered financial company in a sound and solvent condition; and (II) appropriate to carry on the business of the covered financial company and preserve and conserve the
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262 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 assets and property of the covered financial company. (ii) DURATION.The status of the Corporation as qualified receiver shall terminate at the end of the 2-year period following the date of its appointment as qualified receiver, unless the Corporation, with the approval of the Secretary and the Federal Reserve Board, terminates the qualified receivership before the end of the 2-year period. At the end of the two-year period, the qualified receivership shall become a receivership with the Corporation as receiver. (iii) EXTENSION
CEIVERSHIP.The OF QUALIFIED RE-
Corporation may, with
the approval of the Secretary and the Federal Reserve Board, extend the qualified receivership for 3 additional 1-year periods beyond the initial two-year period if necessary to promote financial stability. (E) ADDITIONAL
POWERS AS RECEIVER.
The Corporation may, as receiver, and subject to all legally enforceable and perfected security interests, place the covered financial company
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263 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 in liquidation and proceed 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. (F) ORGANIZATION
OF NEW COMPANIES.
The Corporation as receiver may organize a bridge financial company under subsection (h). (G) MERGER;
LIABILITIES. TRANSFER OF ASSETS AND
(i) IN
GENERAL.Subject
to clause
(ii), the Corporation as receiver or qualified receiver may (I) merge the covered financial company with another company; or (II) transfer any asset or liability of the covered financial company (including assets and liabilities associated with any trust or custody business) without obtaining any approval, assignment, or consent with respect to such transfer.
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264 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (ii) FEDERAL

AGENCY APPROVAL;
ANTITRUST REVIEW.
(I) IN
GENERAL.If
a trans-
action described in clause (i) 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, 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 proposed transaction and the Attorney General shall provide the required report within 10 days of the request. If a filing is required under the Hart Scott-Rodino Antitrust Improvements Act of 1976 with the Department of Justice or the Federal Trade Commission, the waiting period shall expire not later than the 30th day following such filing notwithstanding any other provision of
(453880|2)
265 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Federal law or any attempt by any Federal agency to extend such waiting period, and no further request for information by any Federal agency shall be permitted. (II) EMERGENCY.If the Secretary in consultation with the Chairman of the Federal Reserve Board has found that the Corporation must act immediately to prevent the probable failure of 1 or more of the covered financial companies involved, the approvals and filings referred to in subclause (I) shall not be required and the transactions may be consummated immediately by the Corporation. (H) PAYMENT
OF VALID OBLIGATIONS.
The Corporation, as receiver or qualified receiver, shall, to the extent 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 or qualified receiver in accordance with the prescriptions and limitations of this title.
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266 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (I) SUBPOENA (i) IN

AUTHORITY.
GENERAL.The
Corporation
may, for purposes of carrying out any power, authority, or duty with respect to a 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 covered financial company were an insured depository institution. (ii) RULE
OF CONSTRUCTION.This
section shall not be construed as limiting any rights that the Corporation, in any capacity, might otherwise have to exercise any powers described in clause (i) under any other provision of law. (J) INCIDENTAL
POWERS.The
Corpora-
tion, as receiver or qualified receiver, may (i) exercise all powers and authorities specifically granted to receivers or qualified receivers under this section and such inci-
(453880|2)
267 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 dental powers as shall be necessary to carry out such powers; and (ii) take any action authorized by this section, which the Corporation determines is in the best interests of the covered financial company, its customers, its creditors, its counterparties, or the stability of the financial system. (K) UTILIZATION
OF PRIVATE SECTOR.
In carrying out its responsibilities in the management and disposition of assets from a covered financial company, the Corporation, as receiver or qualified receiver, 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 utilization of such services is practicable, efficient, and cost effective. (L) SHAREHOLDERS
COVERED FINANCIAL AND CREDITORS OF COMPANY.Notwith-
standing any other provision of law, the Corporation as receiver or qualified receiver for a covered financial company pursuant to this sec-
(453880|2)
268 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 tion and its succession, by operation of law, to the rights, titles, powers, and privileges described in subparagraph (A) 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 provision s in section 1609(b). (M) COORDINATION
WITH FOREIGN FINAN-
CIAL AUTHORITIES.The
Corporation as re-
ceiver or qualified receiver for a covered financial company shall coordinate with the appropriate foreign financial authorities regarding the resolution of subsidiaries of the covered financial company that are established in a country other than the United States. (2) AUTHORITY
MINE CLAIMS. OF CORPORATION TO DETER-
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269 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (A) IN
GENERAL.The
Corporation may,
as receiver, determine claims in accordance with the requirements of this subsection and regulations prescribed under paragraph (3). (B) NOTICE
REQUIREMENTS.The
re-
ceiver, 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 covered financial companys creditors to present their claims, together with proof, to the receiver by a date specified in the notice which shall be not less than 90 days after the publication of such notice; and (ii) republish such notice approximately 1 month and 2 months, respectively, after the publication under clause (i). (C) MAILING
REQUIRED.The
receiver
shall mail a notice similar to the notice published under subparagraph (B)(i) at the time of such publication to any creditor shown on the covered financial companys books (i) at the creditors last address appearing in such books; or
(453880|2)
270 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (ii) upon discovery of the name and address of a claimant not appearing on the covered financial companys books, within 30 days after the discovery of such name and address. (3) RULEMAKING
AUTHORITY RELATING TO DE-
TERMINATION OF CLAIMS.
(A) IN
GENERAL.Subject
to subsection
(b), the Corporation shall prescribe rules and regulations regarding the allowance or disallowance of claims by the Corporation and providing for administrative determination of claims and review of such determination. (B) EXISTING
RULES.The
Corporation
may elect to use the regulations adopted pursuant to the provisions of section 11 of the Federal Deposit Insurance Act with respect to the determination of claims for a covered financial company as if the covered financial company were an insured depository institution. (4) PROCEDURES
CLAIMS. FOR DETERMINATION OF
(A) DETERMINATION (i) IN
PERIOD.
GENERAL.Before
the end of
the 180-day period beginning on the date
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271 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 any claim against a covered financial company is filed with the Corporation as receiver, the Corporation shall determine whether to allow or disallow the claim and shall notify the claimant of any determination with respect to such claim. (ii) EXTENSION
OF TIME.The
period
described in clause (i) may be extended by a written agreement between the claimant and the Corporation. (iii) MAILING
CIENT.The OF NOTICE SUFFI-
requirements of clause (i)
shall be deemed to be satisfied if the notice of any determination with respect to any claim is mailed to the last address of the claimant which appears (I) on the covered financial companys books; (II) in the claim filed by the claimant; or (III) in documents submitted in proof of the claim. (iv) CONTENTS
ALLOWANCE.If OF NOTICE OF DIS-
any claim filed under
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272 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 clause (i) is disallowed, the notice to the claimant shall contain (I) a statement of each reason for the disallowance; and (II) the procedures available for obtaining agency review of the determination to disallow the claim or judicial determination of the claim. (B) ALLOWANCE
OF PROVEN CLAIM.The
Corporation shall allow any claim received on or before the date specified in the notice published under paragraph (2)(B)(i) by the Corporation from any claimant which is proved to the satisfaction of the Corporation. (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 any claimant after the date specified in the notice published under
(453880|2)
273 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 paragraph (2)(B)(i) and such claim may be considered by the receiver if (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 (i) IN
TO DISALLOW CLAIMS.
GENERAL.The
Corporation
may disallow any portion of any claim by a creditor or claim of security, preference, or priority which is not proved to the satisfaction of the Corporation. (ii) PAYMENTS
TO LESS THAN FULLY
SECURED CREDITORS.In
the case of a
claim of a creditor against a covered financial company which 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
(453880|2)
274 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 claim against the covered financial company; 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 or perfected security interest in the assets of the covered financial company securing any such extension of credit. (E) NO
JUDICIAL REVIEW OF DETERMINA-
TION PURSUANT TO SUBPARAGRAPH (D).No
court may review the Corporation determination pursuant to subparagraph (D) to disallow a claim.
(453880|2)
275 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (F) LEGAL (i)

EFFECT OF FILING.
STATUTE
OF
LIMITATION
TOLLED.For
purposes of any applicable
statute of limitations, the filing of a claim with the Corporation shall constitute a commencement of an action. (ii) NO
PREJUDICE TO OTHER AC-
TIONS.Subject
to paragraph (9), the fil-
ing of a claim with the Corporation 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. (5) PROVISION
OF CLAIMS. FOR JUDICIAL DETERMINATION
(A) IN
GENERAL.Before
the end of the
60-day period beginning on the earlier of (i) the end of the period described in paragraph (4)(A)(i) (or, if extended by agreement of the Corporation and the claimant, the period described in paragraph (4)(A)(ii)) with respect to any claim against a covered financial company for which the Corporation is receiver; or
(453880|2)
276 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (ii) the date of any notice of disallowance of such claim pursuant to paragraph (4)(A)(i), the claimant may file suit on a claim (or continue an action commenced before the appointment of the receiver) in the district or territorial court of the United States for the district within which the covered financial companys principal place of business is located or the United States District Court for the District of Columbia (and such court shall have jurisdiction to hear such claim). (B) STATUTE
OF LIMITATIONS.If
any
claimant fails to file suit on such claim (or continue an action commenced before the appointment of the receiver) before the end of the 60day period described in subparagraph (A), 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. (6) EXPEDITED
DETERMINATION OF CLAIMS.
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277 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (A) ESTABLISHMENT

REQUIRED.The
Corporation shall establish a procedure for expedited relief outside of the routine claims process established under paragraph (4) for claimants who (i) allege the existence of legally valid and enforceable or perfected security interests in assets of any covered financial company for which the Corporation has been appointed as receiver; and (ii) allege that irreparable injury will occur if the routine claims procedure is followed. (B) DETERMINATION
PERIOD.Before
the
end of the 90-day period beginning on the date any 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 (II) whether such claim should be determined pursuant to the procedures established pursuant to paragraph (4); and
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278 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (ii) notify the claimant of the determination, and if the claim is disallowed, provide a statement of each reason for the disallowance and the procedure for obtaining judicial determination. (C) PERIOD
SUIT.Any FOR FILING OR RENEWING
claimant who files a request for ex-
pedited relief shall be permitted to file a suit, or to continue such a suit filed before the appointment of the Corporation as receiver, seeking a determination of the claimants rights with respect to such security interest 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 the Corporation denies the claim. (D) STATUTE
OF LIMITATIONS.If
an ac-
tion 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 or motion may be filed in accordance with subparagraph (B), the claim shall be deemed to be
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279 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 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 (i)
EFFECT OF FILING.
STATUTE
OF
LIMITATION
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 AC-
TIONS.Subject
to paragraph (9), the fil-
ing 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. (7) AGREEMENTS
RECEIVER.No AGAINST INTEREST OF THE
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 is in writing and executed by an authorized of-
(453880|2)
280 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 ficer or representative of the covered financial company. (8) PAYMENT (A) IN
OF CLAIMS.
GENERAL.The
Corporation as re-
ceiver may, in its discretion and to the extent 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 Corporation pursuant to a final determination pursuant to paragraph (6); or (ii) determined by the final judgment of any court of competent jurisdiction. (B) PAYMENT
OF DIVIDENDS ON
CLAIMS.The
receiver may, in the receivers
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 (in the Corporations capacity as receiver), by reason of any such payment, for failure to pay dividends to a claimant whose claim is not proved at the time of any such payment.
(453880|2)
281 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (C) RULEMAKING

PORATION.The AUTHORITY OF COR-
Corporation may prescribe
such rules, including definitions of terms, as it deems appropriate to establish a single uniform interest rate for, or to make payments of post insolvency interest to creditors holding proven claims against the receivership estates of a covered financial company following satisfaction by the receiver of the principal amount of all creditor claims. (9) SUSPENSION (A) IN
OF LEGAL ACTIONS.
GENERAL.After
the appointment
of the Corporation as receiver or qualified receiver for a covered financial company, the Corporation may request a stay for a period not to exceed (i) 45 days, in the case of any qualified receiver; and (ii) 90 days, in the case of any receiver, in any noncriminal judicial action or proceeding to which such covered financial company is or becomes a party. (B) GRANT
QUIRED.Upon OF STAY BY ALL COURTS RE-
receipt of a request by the Cor-
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282 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 poration pursuant to subparagraph (A) for a stay of any non-criminal judicial action or proceeding in any court with jurisdiction of such action or proceeding, the court shall grant such stay as to all parties. (10) ADDITIONAL (A) PRIOR Corporation
RIGHTS AND DUTIES. FINAL ADJUDICATION.The
shall
abide
by
any
final
unappealable judgment of any court of competent jurisdiction which was rendered before the appointment of the Corporation as receiver or qualified receiver. (B) RIGHTS
CEIVER.In AND REMEDIES OF RE-
the event of any appealable judg-
ment, the Corporation as receiver or qualified receiver shall (i) have all the rights and remedies available to the covered financial company (before the appointment of the receiver or qualified receiver under section 1604) and the Corporation, including but not limited to removal to Federal court and all appellate rights; and (ii) not be required to post any bond in order to pursue such remedies.
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283 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (C) NO
ATTACHMENT OR EXECUTION.No
attachment or execution may issue by any court upon assets in the possession of the receiver. (D) LIMITATION
ON JUDICIAL REVIEW.
Except as otherwise provided in this subsection, 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
exer-
cising any right, power, privilege, or authority as receiver or qualified receiver in connection with any covered financial company for which the Corporation is acting as receiver or qualified receiver under this section, the Corporation shall, to the greatest extent practicable, conduct its operations in a manner which
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284 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (i) maximizes the net present value return from the sale or disposition of such assets; (ii) minimizes the amount of any loss realized in the resolution of cases; (iii) minimizes the cost to the general fund of the Treasury; (iv) mitigates the potential for serious adverse effects to the financial system and the U.S. economy; (v) ensures timely and adequate competition and fair and consistent treatment of offerors; and (vi) prohibits discrimination on the basis of race, sex, or ethnic groups in the solicitation and consideration of offers. (11) STATUTE
OF LIMITATIONS FOR ACTIONS
BROUGHT BY RECEIVER.
(A) IN
any
provision of any contract, the applicable statute of limitations with regard to any action brought by the Corporation as receiver or qualified receiver shall be (i) in the case of any contract claim, the longer of
(453880|2)
285 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (I) the 6-year period beginning on the date 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 the claim accrues; or (II) the period applicable under State law. (B) DETERMINATION
OF THE 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 such subparagraph shall be the later of (i) the date of the appointment of the Corporation as receiver or qualified receiver under this title; or (ii) the date on which the cause of action accrues. (C) REVIVAL
OF ACTION. OF EXPIRED STATE CAUSES
(i) IN
GENERAL.In
the case of any
tort claim described in clause (ii) for which
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286 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the statute of limitation applicable under State law with respect to such claim has expired not more than 5 years before the appointment of the Corporation as receiver or qualified receiver, the Corporation may bring an action as receiver or qualified receiver on such claim without regard to the expiration of the statute of limitation applicable under State law. (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. (12) FRAUDULENT (A) IN
TRANSFERS.
GENERAL.The
Corporation, as re-
ceiver or qualified receiver for any covered financial company, may avoid a transfer of any interest of an institution affiliated party, or any person who the Corporation determines is a debtor of the covered financial company, in property, or any obligation incurred by such party or person, that was made within 5 years of the date on which the Corporation was ap-
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287 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 pointed receiver or qualified receiver if such party or person voluntarily or involuntarily made such transfer or incurred such liability with the intent to hinder, delay, or defraud the covered financial company or the Corporation. (B) RIGHT
OF RECOVERY.To
the extent
a transfer is avoided under subparagraph (A), 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 institution-affiliated party or person for whose benefit such transfer was made; or (ii) any immediate or mediate transferee of any such initial transferee. (C) RIGHTS
GEE.The OF TRANSFEREE OR OBLI-
Corporation may not recover under
subparagraph (B) (i) any transfer that takes for value, including satisfaction or securing of a present or antecedent debt, in good faith, or
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288 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (ii) any immediate or mediate good faith transferee of such transferee. (D) RIGHTS
UNDER THIS SUBSECTION.
The rights of the Corporation as receiver or qualified receiver of a covered financial company under this subsection shall be superior to any rights of a trustee or any other party (other than any party which is a Federal agency) under title 11, United States Code. (E) DEFINITION.For purposes of this subsection, the term institution affiliated party means (i) any director, officer, employee, or controlling stockholder of, or agent for, a covered financial company; (ii) any shareholder, consultant, joint venture partner, and any other person as determined by the Corporation (by regulation or otherwise) who participates in the conduct of the affairs of a covered financial company; and (iii) any independent contractor (including any attorney, appraiser, or accountant) who knowingly or recklessly participates in
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289 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 or (III) any unsafe or unsound practice, which caused or is likely to cause more than a minimal financial loss to, or a significant adverse effect on, the covered financial company. (13) ATTACHMENT
OF ASSETS AND OTHER IN-
(I) any violation of any law or regulation; (II) any breach of fiduciary duty;
JUNCTIVE RELIEF.Subject
to paragraph (14), any
court of competent jurisdiction may, at the request of the Corporation, 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 65 of the Federal Rules of Civil Procedure shall apply with respect to any proceeding under paragraph (13) without regard to the requirement of such rule
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290 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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 such State provide substantially similar protections to such partys right to due process as 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 OR QUALIFIED RECEIVER.
Notwithstanding any other provision of this subsection, any final and unappealable judgment for monetary damages entered against the Corporation as receiver or qualified 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 or the qualified receiver. Nothing in this paragraph shall be construed to limit the power of a receiver or qualified receiver to exer-
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291 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 cise any rights under contract or law, including to terminate, breach, cancel, or otherwise discontinue such agreement. (16) ACCOUNTING
QUIREMENTS. AND RECORDKEEPING RE-
(A) IN
GENERAL.The
Corporation as re-
ceiver or qualified receiver shall, consistent with the accounting and reporting practices and procedures established by the Corporation, maintain a full accounting of each qualified receivership, receivership, or other disposition of any covered financial company. (B) ANNUAL
ACCOUNTING OR REPORT.
With respect to each receivership or qualified receivership to which the Corporation was 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
re-
port prepared pursuant to subparagraph (B) shall be made available by the Corporation upon request to any member of the public. (D) RECORDKEEPING
REQUIREMENT.
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292 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 (i) IN
GENERAL.Except
as provided
in clause (ii), after the end of the 6-year period beginning on the date the Corporation is appointed as receiver of a covered financial company the Corporation may destroy any records of such covered financial company which the Corporation, in the Corporations discretion, determines to be unnecessary unless directed not to do so by a court of competent jurisdiction or governmental agency, or prohibited by law. (ii) OLD
RECORDS.Notwithstanding
clause (i), the Corporation may destroy records of a covered financial company which are at least 10 years old as of the date on which the Corporation is appointed as the receiver of such company in accordance with clause (i) at any time after such appointment is final, without regard to the 6-year period of limitation contained in clause (i). (b) PRIORITY
OF
EXPENSES
AND
UNSECURED
23 CLAIMS. 24 25 (1) IN
GENERAL.Unsecured
claims against a
covered financial company, or the receiver for such
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293 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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) Any other general or senior liability of the covered financial company (which is not a liability described under subparagraph (D) or (E)). (D) Any obligation subordinated to general creditors (which is not an obligation described under subparagraph (E)). (E) 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 PRI-
ORITY.In
the event that the Corporation as re-
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294 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ceiver 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.Unse-
cured 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 receiver may take any action (including making payments) that does not comply with this subsection, if (A) the Corporation determines that such action is necessary to maximize the value of the assets of the covered financial company, to maximize the present value return from the sale or other disposition of the assets of the covered financial company, to minimize the amount of any loss realized upon the sale or other disposi-
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295 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 tion of the assets of the covered financial company, or to contain or address serious adverse effects on financial stability or the U.S. economy; and (B) all claimants that are similarly situated under paragraph (1) receive not less than the amount provided in subsection (d)(2). (3) SECURED
CLAIMS UNAFFECTED.This
sub-
section shall not affect secured claims, 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. (4) DEFINITIONS.As used in this subsection, the term administrative expenses of the receiver includes (A) the actual, necessary costs and expenses incurred by the receiver in preserving the assets of a covered financial company or liquidating or otherwise resolving the affairs of a covered financial company for which the Corporation has been appointed as receiver; and (B) any obligations that the receiver determines are necessary and appropriate to facili-
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296 1 2 3 tate the smooth and orderly liquidation or other resolution of the covered financial company. (c) PROVISIONS RELATING
TO OF
CONTRACTS ENTERED RECEIVER

OR
4 INTO BEFORE APPOINTMENT 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

FIED
QUALI-
RECEIVER. (1) AUTHORITY

TO REPUDIATE CONTRACTS.
In addition to any other rights a receiver or qualified receiver may have, the Corporation as receiver or qualified 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 receiver or qualified receiver, in the receivers or qualified receivers discretion, determines to be burdensome; and (C) the disaffirmance or repudiation of which the receiver or qualified receiver determines, in the receivers or qualified receivers discretion, will promote the orderly administration of the covered financial companys affairs. (2) TIMING
OF REPUDIATION.The
receiver or
qualified receiver appointed for any covered financial company under section 1604 shall determine wheth-
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297 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 er or not to exercise the rights of repudiation under this subsection within a reasonable period following such appointment. (3)
ATION.
CLAIMS
FOR
DAMAGES
FOR
REPUDI-
(A) IN
GENERAL.Except
as otherwise
provided in subparagraph (C) and paragraphs (4), (5), and (6), the liability of the receiver or qualified receiver 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 receiver or qualified 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
AGES.For LIABILITY FOR OTHER DAM-
purposes of subparagraph (A), the
term actual direct compensatory damages does not include
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298 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (i) punitive or exemplary damages; (ii) damages for lost profits or opportunity; or (iii) damages for pain and suffering. (C) MEASURE
OF DAMAGES FOR REPUDI-
ATION 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 subsection and subsection (d) except as otherwise specifically provided in this subsection. (4) LEASES
UNDER WHICH THE COVERED FI-
NANCIAL COMPANY IS THE LESSEE.
(A) IN
GENERAL.If
the receiver or quali-
fied receiver disaffirms or repudiates a lease under which the covered financial company was the lessee, the receiver or qualified receiver shall not be liable for any damages (other than
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299 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 damages determined pursuant to subparagraph (B)) for the disaffirmance or repudiation of such lease. (B) PAYMENTS
OF RENT.Notwith-
standing subparagraph (A), the lessor under a lease to which such subparagraph applies shall (i) be entitled to the contractual rent accruing before the later of the date (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 subsection and subsection (d). (5) LEASES
UNDER WHICH THE COVERED FI-
NANCIAL COMPANY IS THE LESSOR.
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300 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (A) IN
GENERAL.If
fied receiver 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
REMAINING IN APPLICABLE TO LESSEE
POSSESSION.If
any lessee
under a lease described in subparagraph (A) remains in possession of a leasehold interest pursuant to clause (ii) of such subparagraph (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;
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301 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (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 receiver or qualified receiver shall not be liable to the lessee 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). (6) CONTRACTS
ERTY. FOR THE SALE OF REAL PROP-
(A) IN
GENERAL.If
fied receiver repudiates any contract (which meets the requirements of subsection (a)(7)) 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
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302 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (ii) remain in possession of such real property. (B) PROVISIONS

APPLICABLE TO PUR-
CHASER 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 such subparagraph (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 receiver or qualified receiver shall (I) not be liable to the purchaser for any damages arising after such date as a result of the repudiation
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303 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 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 (i) IN
AND SALE ALLOWED.
GENERAL.No
provision of this
paragraph shall be construed as limiting the right of the receiver or qualified 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 de-
scribed in clause (i) is consummated, the receiver or qualified 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.
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304 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (7) PROVISIONS

TRACTS. APPLICABLE TO SERVICE CON-
(A) SERVICES
POINTMENT.In
PERFORMED BEFORE AP-
the case of any contract for
services between any person and any covered financial company for which the Corporation has been appointed receiver or qualified receiver, any claim of such person for services performed before the appointment of the receiver or qualified receiver shall be (i) a claim to be paid in accordance with subsections (a), (b) and (d); and (ii) deemed to have arisen as of the date the receiver or qualified receiver was appointed. (B) SERVICES
PERFORMED AFTER AP-
POINTMENT AND PRIOR TO REPUDIATION.If,
in the case of any contract for services described in subparagraph (A), the receiver or qualified receiver accepts performance by the other person before the receiver or qualified receiver makes any determination to exercise the right of repudiation of such contract under this section
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305 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (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 or qualified receivership. (C) ACCEPTANCE
OF PERFORMANCE NO
BAR TO SUBSEQUENT REPUDIATION.The
ac-
ceptance by any receiver or qualified receiver of services referred to in subparagraph (B) in connection with a contract described in such subparagraph shall not affect the right of the receiver or qualified receiver to repudiate such contract under this section at any time after such performance. (8) CERTAIN
QUALIFIED FINANCIAL CON-
TRACTS.
(A) RIGHTS
OF PARTIES TO CONTRACTS.
Subject to paragraphs (9) and (10) of this subsection and notwithstanding any other provision of this section (other than subsection (a)(7)), any other Federal law, or the law of any State, no person shall be stayed or prohibited from exercising
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306 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (i) any right such person has to cause the termination, liquidation, or acceleration of any qualified financial contract with a covered financial company which arises upon the appointment of the Corporation as receiver for such covered financial company 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). (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 and agreements described in clause (i), including any master agreement for such contracts or agreements. (B) APPLICABILITY
SIONS.Subsection OF OTHER PROVI-
(a)(9) shall apply in the
case of any judicial action or proceeding brought against any receiver referred to in subparagraph (A), or the covered financial company for which such receiver was appointed, by
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307 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 any party to a contract or agreement described in subparagraph (A)(i) with such company. (C) CERTAIN
ABLE. TRANSFERS NOT AVOID-
(i)
IN
paragraph (11), 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 such or as receiver or qualified receiver of a covered financial company, may not avoid any transfer of money or other property in connection with any qualified financial contract with a covered financial company. (ii) EXCEPTION
FERS.Clause FOR CERTAIN TRANS-
(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 Corporation determines that the transferee had actual intent to hinder, delay, or defraud such company, the creditors of
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308 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 such company, or any receiver or qualified receiver appointed for such company. (D) CERTAIN
CONTACTS AND AGREE-
MENTS DEFINED.For
purposes of this sub-
section, the following definitions shall apply: (i) QUALIFIED term

FINANCIAL CON-
TRACT.The
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
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309 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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 se-
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310 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 curities 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 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 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
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311 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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 subclause (I), (III), (IV), (V), (VI), (VII), (VIII), (IX), or (X), 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
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312 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (III), (IV), (V), (VI), (VII), (VIII), (IX), or (X); 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;
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313 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 (III) with respect to a leverage transaction 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; (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; merchant, a leverage
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314 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (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 subclause (I), (II), (III), (IV), (V), (VI), (VII), or (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 subclause (I), (II), (III), (IV), (V), (VI), (VII), or (VIII); or (X) any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in this clause,
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315 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 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 more than 2 days after the date 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 trans-
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316 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 action, 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 subclauses (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 agreement that is referred to in subclause (I), (II), or (III); or (V) any security agreement or arrangement or other credit enhance-
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317 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ment 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 the Securities Exchange Act of 1934), mortgage loans, interests in mortgagerelated securities or mortgage loans, eligible bankers acceptances, qualified foreign government securities (which for purposes of this clause shall mean a security that is a direct obligation of, or that is fully guaranteed by, the central government of a member of
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318 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the Organization for Economic Cooperation and Development as determined by regulation or order adopted by the Federal Reserve Board) 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 by with such a simultaneous transferee to
agreement
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 regula-
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319 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 tion, 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 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
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320 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (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
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321 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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 se-
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322 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 curities 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 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
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323 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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 agreements or transactions referred to in subclause (I), (II), (III), (IV), or (V), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause. (vii) DEFINITIONS
FAULT.When RELATING TO DE-
used in this paragraph and
paragraph (10) (I) The term default shall mean, with respect to a covered financial company, any adjudication or other official determination by any court of competent jurisdiction, or other public authority pursuant to which a conservator, receiver, or other legal custodian is appointed; and
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324 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (II) The term in danger of default shall mean 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 (CC) in the opinion of the Corporation or such authority (bb) the covered financial company has incurred or is likely to incur losses that will deplete
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325 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 all or substantially all of its capital; and (cc) there is no reasonable prospect that the capital will be replenished without Federal assistance. (viii) TREATMENT
OF MASTER AGREE-
MENT AS ONE AGREEMENT.Any
master
agreement for any contract or agreement described in any preceding clause of this subparagraph (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 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, abso-
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326 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 lute 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 covered financial companys equity of redemption. (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) CERTAIN
PROTECTIONS IN EVENT OF
APPOINTMENT OF QUALIFIED RECEIVER.Not-
withstanding any other provision of this section (other than paragraph (10) of this subsection and subsection (a)(7) of this section), any other Federal law, or the law of any State, no person shall be stayed or prohibited from exercising (i) any right such person has to cause the termination, liquidation, or acceleration of any qualified financial contract with a covered financial company in a qualified receivership based upon a default under such financial contract which is enforceable under applicable noninsolvency law;
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327 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (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 values, payment amounts, or other transfer obligations arising under or in connection with such qualified financial contracts. (F) 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 in accordance with paragraphs (9) and (10) of this subsection or to disaffirm or repudiate any such contract in accordance with subsection (c)(1) of this section. (G) WALKAWAY
TIVE. CLAUSES NOT EFFEC-
(i)
IN
the provisions of subparagraphs (A) and (E) and sections 403 and 404 of the Fed-
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328 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 eral 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
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 the receiver is appointed until the earlier of (I) the time 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 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
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329 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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 such partys status 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 a receiver or qualified receiver of such covered financial company, and not as a result of a partys exercise of any right to offset, setoff, or net obligations that exist under the contract, any other contract between those parties, or applicable law. (H) RECORDKEEPING.The Corporation, in consultation with the Federal Reserve Board, may prescribe regulations requiring that the covered financial company maintain such
records with respect to qualified financial contracts (including market valuations) as the Corporation determines to be necessary or appropriate in order to assist the receiver or qualified receiver of the covered financial company in being able to exercise its rights and fulfill its
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330 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 obligations under this paragraph or paragraph (9) or (10). (9) TRANSFER
TRACTS. OF QUALIFIED FINANCIAL CON-
(A) IN
GENERAL.In
making any transfer
of assets or liabilities of a covered financial company in default which includes any qualified financial contract, the receiver or qualified 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
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331 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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, FINAN-
CIAL INSTITUTION, OR BRANCH OR AGENCY THEREOF.In
transferring any qualified finan-
cial contracts and related claims and property under subparagraph (A)(i), the receiver or qualified receiver for the covered financial company shall not make such transfer to a foreign
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332 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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 a receiver or qualified
receiver transfers any qualified financial contract and related claims, property, and credit enhancements 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.
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333 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (D) DEFINITIONS.For purposes of this paragraph, 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 the term clearing organization has the same meaning as in section 402 of the Federal Deposit Insurance Corporation Improvement Act of 1991. (10) NOTIFICATION (A) IN
OF TRANSFER.
GENERAL.If
(i) the receiver or qualified receiver for a covered financial company in default or in danger of default transfers any assets and liabilities of the covered financial company; and (ii) the transfer includes any qualified financial contract, the receiver or qualified receiver shall notify any person who is a party to any such contract of such transfer by 5:00 p.m. (eastern time) on the business day following the date of the appointment of the receiver in the case of a re-
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334 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ceivership, or the business day following such transfer in the case of a qualified receivership. (B) CERTAIN
ABLE. RIGHTS NOT ENFORCE-
(i) RECEIVERSHIP.A 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) of this subsection solely by reason of or incidental to the appointment under this section of a receiver for the covered financial company (or the insolvency or financial condition of the covered financial company for which the receiver has been appointed) (I) until 5:00 p.m. (eastern time) on the business day following the date of the appointment of the receiver; or (II) after the person has received notice that the contract has been transferred pursuant to paragraph (9)(A). (ii) QUALIFIED
RECEIVERSHIP.A
person who is a party to a qualified finan-
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335 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 cial contract with a covered financial company may not exercise any right such person has to terminate, liquidate, or net such contract under paragraph (8)(E) of this subsection or section 403 of Federal Deposit Insurance Corporation Improvement Act of 1991 solely by reason of or incidental to the appointment under this section of a qualified receiver for the covered financial company (or the insolvency or financial condition of the covered financial company for which the qualified receiver has been appointed). (iii) NOTICE.For purposes of this paragraph, the receiver or qualified 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 receiver or qualified receiver has taken steps reasonably calculated to provide notice to such person by the time specified in subparagraph (A). (C) TREATMENT
COMPANY.For OF BRIDGE FINANCIAL
purposes of paragraph (9), a
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336 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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
pur-
poses of this paragraph, the term business day means any day other than any Saturday, Sunday, or any day on which either the 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 a receiver or qualified receiver with respect to any qualified financial contract to which a covered financial company is a party, the receiver or qualified receiver for such covered financial 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
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337 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (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 IN-
TERESTS 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 where such an interest is taken in contemplation of the companys insolvency or with the intent to hinder, delay, or defraud the company or the creditors of such company; or (B) legally enforceable interest in customer property. (13) AUTHORITY (A) IN
TO ENFORCE CONTRACTS.
GENERAL.The
receiver or quali-
fied receiver may enforce any contract, other than a directors or officers liability insurance contract or a financial institution bond, entered into by the covered financial company notwithstanding any provision of the contract providing for termination, default, acceleration, or exer-
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338 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 cise of rights upon, or solely by reason of, insolvency or the appointment of or the exercise of rights or powers by a receiver or qualified receiver. (B) CERTAIN
RIGHTS NOT AFFECTED.
No provision of this paragraph may be construed as impairing or affecting any right of the receiver or qualified receiver to enforce or recover under a directors or officers liability insurance contract or financial institution bond under other applicable law. (C) CONSENT (i) IN
REQUIREMENT.
GENERAL.Except
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, 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 receiver or qualified receiver, as appropriate, of the covered financial company during the 45-day period beginning on the
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339 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (14) date of the appointment of the qualified receiver, or during the 90-day period beginning on the date of the appointment of the receiver, as applicable. (ii) CERTAIN
EXCEPTIONS.No
provi-
sion 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 receiver or qualified receiver to fail to comply with otherwise enforceable provisions of such contract. 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
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340 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (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, but not limited, to 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. (d) VALUATION OF CLAIMS IN DEFAULT. (1) IN
any other
provision of Federal law or the law of any State, and regardless of the method which the Corporation determines to utilize with respect to a covered financial company, including transactions authorized under subsection (h), this subsection shall govern the rights of the creditors of such covered financial company. (2) MAXIMUM
LIABILITY.The
maximum li-
ability of the Corporation, acting as receiver or in
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341 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 any other capacity, to any person having a claim against the receiver or the covered financial company for which such receiver is appointed shall equal the amount such claimant would have received if (A) a determination had not been made under section 1603(b) with respect to the covered financial company; and (B) the covered financial company had been liquidated under title 11, United States Code, or any case related to title 11, United States Code (including but not limited to a case initiated by the Securities Investor Protection Corporation with respect to a financial company subject to the Securities Investor Protection Act of 1970), or any State insolvency law. (3) ADDITIONAL (A) IN
PAYMENTS AUTHORIZED.
GENERAL.The
Corporation may,
as receiver and with the approval of the Secretary, make additional payments or credit additional amounts to or with respect to or for the account of any claimant or category of claimants of a covered financial company if the Corporation determines that such payments or credits are necessary or appropriate to
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342 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 (i) minimize losses to the receiver from the resolution of the covered financial company under this section; or (ii) prevent or mitigate serious adverse effects to financial stability or the United States economy. (B) MANNER
OF PAYMENT.The
Corpora-
tion 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 pro-
17 vided in this section or at the request of the receiver or 18 qualified receiver appointed for a covered financial com19 pany, no court may take any action to restrain or affect 20 the exercise of powers or functions of the receiver or quali21 fied receiver hereunder. 22 23 24 25 (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 de-
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343 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 scribed 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 or qualified receiver of such covered financial company; (B) acting based upon a suit, claim, or cause of action purchased from, assigned by, or otherwise conveyed by such receiver or qualified 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 section 1604. (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.
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344 1 2 3 4 (3) SAVINGS

CLAUSE.Nothing
in this sub-
section shall impair or affect any right of the Corporation under other applicable law. (g) DAMAGES.In any proceeding related to any
5 claim against a covered financial companys director, offi6 cer, employee, agent, attorney, accountant, appraiser, or 7 any other party employed by or providing services to a 8 covered financial company, recoverable damages deter9 mined to result from the improvident or otherwise im10 proper use or investment of any covered financial com11 panys assets shall include principal losses and appropriate 12 interest. 13 14 15 16 17 18 19 20 21 22 23 24 25 (h) BRIDGE FINANCIAL COMPANIES. (1) ORGANIZATION. (A) PURPOSE.The Corporation, as receiver of 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
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345 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 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.If the Corporation is appointed as receiver for a covered financial company, the Corporation 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
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346 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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
arti-
cles of association and organization certificate of a bridge financial 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, but not limited to, the bylaws and the number of directors of the
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347 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 board of directors) and operations of the bridge financial company. (E) TRANSFER
OF RIGHTS AND PRIVI-
LEGES OF COVERED FINANCIAL COMPANY.
(i)
IN
any other provision of Federal law or the law of any State, 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 AP-
PROVAL.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
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348 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 law, assignment, or consent with respect thereto. (F) CORPORATE

GOVERNANCE AND ELEC-
TION 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 as 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.Not-
withstanding 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.
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349 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (ii) NO
CONTRIBUTION BY THE COR-
PORATION 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. (3) INTERESTS
IN AND ASSETS AND OBLIGA-
TIONS OF COVERED FINANCIAL COMPANY.Notwith-
standing paragraphs (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
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350 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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 a receiver has been appointed may have to any shareholder, member, general 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. OF ASSETS AND LIABIL-
(A) TRANSFER
ITIES.The
Corporation, as receiver, may
transfer any assets and liabilities of a covered financial company (including any assets or liabilities associated with any trust or custody
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351 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 business) to one or more bridge financial companies in accordance with and subject to the restrictions of paragraph (1)(B). (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)(B). (C) TREATMENT
BUSINESS.For OF TRUST OR CUSTODY
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
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352 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 State law, assignment, or consent with respect thereto. (E) EQUITABLE
TREATMENT OF SIMI-
LARLY SITUATED CREDITORS.The
Corpora-
tion 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 actions (including making payments) that do not comply with this subparagraph, if (i) the Corporation determines that such actions are necessary to maximize the value of the assets of the covered financial company, to maximize the present value return from the sale or other disposition of the assets of the covered financial company, to minimize the amount of any loss realized upon the sale or other disposition of the assets of the covered financial company, or to contain or address serious ad-
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353 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 verse effects to financial stability or the U.S. economy; and (ii) all creditors that are similarly situated under subsection (b)(1) receive not less than the amount provided in subsection (d)(2). (F) LIMITATION
ON TRANSFER OF LIABIL-
ITIES.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 up to 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.
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354 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (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 is in writing and executed by an authorized officer or representative of the covered financial company. (8) NO
FEDERAL STATUS. STATUS.A
(A) AGENCY
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
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355 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (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. (9) 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. (10) FEDERAL
REVIEW. AGENCY APPROVAL; ANTITRUST
(A) IN
GENERAL.If
a transaction involv-
ing 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
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356 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 by the Federal agency responsible for such approval with respect thereto. If, 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 a filing is required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with the Department of Justice or the Federal Trade Commission, the waiting period shall expire not later than the 30th day following such filing notwithstanding any other provision of Federal law or any attempt by any Federal agency to extend such waiting period, and no further request for information by any Federal agency shall be permitted. (B) EMERGENCY.If the Secretary, in consultation with the Chairman of the Federal Reserve Board, has found that the Corporation must act immediately to prevent the probable failure of the covered financial company involved, the approvals and filings referred to in
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357 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 subparagraph (A) shall not be required and the transaction may be consummated immediately by the Corporation. (11) DURATION
PANY.Subject OF BRIDGE FINANCIAL COM-
to paragraphs (12), (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 it was granted a charter. The Corporation may, in its discretion, extend the status of the bridge financial company as such for 3 additional 1-year periods. (12) TERMINATION
PANY STATUS.The OF BRIDGE FINANCIAL COM-
status of any bridge financial
company as such shall terminate upon the earliest of (A) 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
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358 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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 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 (11), or the earlier dissolution of the bridge financial company as provided in paragraph (14). (13) EFFECT (A)
OF TERMINATION EVENTS. OR CONSOLIDATION.A
MERGER
merger or consolidation as provided in paragraph (12)(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
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359 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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 (12)(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 State or Federal 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 State or Federal 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
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360 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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 (12)(C), the company shall have all of the rights, powers, and privileges under its constituent documents and applicable State or Federal 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 State or Federal 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
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361 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 bridge financial company, or the sale of all or substantially all of the assets of the bridge financial company, as provided in paragraph (12)(D), at the election of the Corporation the bridge financial company may retain its status as such for the period provided in paragraph (11) or may be dissolved at the election of the Corporation. (E) AMENDMENTS
TO CHARTER.Fol-
lowing the consummation of a transaction described in subparagraph (A), (B), (C), or (D) of paragraph (12), the charter of the resulting company shall be amended to reflect the termination of bridge financial company status, if appropriate. (14) DISSOLUTION
PANY. OF BRIDGE FINANCIAL COM-
(A) IN
any
other provision of State or Federal law, if a bridge financial companys status as such has not previously been terminated by the occurrence of an event specified in subparagraph (A), (B), (C), or (D) of paragraph (12) (i) the Corporation may, in its discretion, dissolve the bridge financial company
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362 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 in accordance with this paragraph at any time; and (ii) the Corporation shall promptly commence dissolution proceedings in accordance with this paragraph upon the expiration of the 2-year period following the date the bridge financial company was chartered, or any extension thereof, as provided in paragraph (11). (B) PROCEDURES.The Corporation shall remain the receiver of a bridge financial company for the purpose of dissolving the bridge financial company. The Corporation as such receiver 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. 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 a receiver of a covered financial company and, notwithstanding any other provision of law, in the exercise of such rights, powers, and privileges the Corporation
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363 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 shall not be subject to the direction or supervision of any State agency or other Federal agency. (15) AUTHORITY (A) IN
TO OBTAIN CREDIT.
GENERAL.A
bridge financial com-
pany may obtain unsecured credit and issue unsecured debt. (B) INABILITY
TO OBTAIN CREDIT.If
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. (i) IN
GENERAL.The
Corporation,
after notice and a hearing, may authorize
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364 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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. (D) BURDEN
OF PROOF.In
any hearing
under this subsection, the Corporation has the burden of proof on the issue of adequate protection. (16) EFFECT
ON DEBTS AND LIENS.The
re-
versal 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 ap-
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365 1 2 3 4 peal, unless such authorization and the issuance of such debt, or the granting of such priority or lien, were stayed pending appeal. (i) SHARING RECORDS.Whenever the Corporation
5 has been appointed as receiver or qualified receiver for a 6 covered financial company, the Federal Reserve Board and 7 the companys primary federal regulatory agency, if any, 8 shall each make all records relating to the company avail9 able to the receiver or qualified receiver which may be used 10 by the receiver or qualified receiver in any manner the re11 ceiver or qualified receiver determines to be appropriate. 12 (j) EXPEDITED PROCEDURES
FOR
CERTAIN
13 CLAIMS. 14 15 16 17 18 19 20 21 22 23 24 (1) TIME

FOR FILING NOTICE OF APPEAL.
The notice of appeal of any order, whether interlocutory or final, entered in any case brought by the Corporation against a covered financial companys director, officer, employee, agent, attorney, accountant, or appraiser 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
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366 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 later than 180 days after the date of the notice of appeal. (2) SCHEDULING.A court of the United States shall expedite the consideration of any case brought by the Corporation against a covered financial companys director, officer, employee, agent, attorney, accountant, or appraiser 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
19 receiver or qualified receiver of any covered financial com20 pany and for purposes of carrying out any power, author21 ity, or duty with respect to a covered financial company 22 23 24 25 (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
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367 1 2 3 4 5 6 7 8 9 10 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
MENTS AND ON
ENTERING SECRECY AGREE-
PROTECTIVE ORDERS.The Corporation
11 may not enter into any agreement or approve any protec12 tive order which prohibits the Corporation from disclosing 13 the terms of any settlement of an administrative or other 14 action for damages or restitution brought by the Corpora15 tion in its capacity as receiver or qualified receiver for a 16 covered financial company. 17 (m) LIQUIDATION
OR OF
CERTAIN COVERED FINANCIAL
18 COMPANIES
BRIDGE FINANCIAL COMPANIES.Not-
19 withstanding any other provision of law (other than a con20 flicting provision of this section), the Corporation, in con21 nection with the liquidation of any covered financial com22 pany or bridge financial company with respect to which 23 the Corporation has been appointed as receiver, shall 24 25 (1) in the case of any covered financial company or bridge financial company that is or has a
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368 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 subsidiary that is a stockbroker (as that term is defined in section 101 of title 11 of the United States Code) but is not a member of the Securities Investor Protection Corporation, apply the provisions of subchapter III of chapter 7 of title 11 of the United States Code in respect of the distribution to any customer of all customer name securities and customer property (as such terms are defined in section 741 of such title 11) as if such covered financial company or bridge financial company were a debtor for purposes of such subchapter; or (2) in the case of any covered financial company or bridge financial company that is a commodity broker (as that term is defined in section 101 of title 11 of the United States Code), apply the provisions of subchapter IV of chapter 7 of title 11 of the United States Code in respect of the distribution to any customer of all customer property (as such terms are defined in section 761 of such title 11) as if such covered financial company or bridge financial company were a debtor for purposes of such subchapter. (n) SYSTEMIC RESOLUTION FUND. (1) ESTABLISHMENT.There is established in the Treasury a separate fund called the Systemic
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369 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Resolution Fund, which shall be available without further appropriation for the cost of actions authorized by this title upon a determination made under section 1603(b) to the Corporation to carry out the authorities contained in this title, including the payment of administrative expenses, the Corporations payment of principal and interest on obligations issued under paragraph (3), and the exercise of authorities under section 1604. (2) PROCEEDS.Amounts received by the Corporation (including amounts borrowed under paragraph (3) and assessments received under subsection (o), but excluding amounts received by any covered financial company when the Corporation is acting in its capacity as receiver or qualified receiver for such company, and excluding amounts credited to the appropriate financing account as a means of financing credit activity, as applicable) shall be deposited into the Fund, subject to apportionment. (3) CAPITALIZATION
OF FUND. AUTHORIZED TO ISSUE
(A) CORPORATION
OBLIGATIONS.In
order to capitalize the Fund
upon the Secretary making the determination provided for in section 1603(b), the Corporation
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370 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 is authorized to issue obligations to the Secretary. (B) SECRETARY

AUTHORIZED TO PUR-
CHASE OBLIGATIONS.The
Secretary may, in
the Secretarys discretion and under such terms and conditions that 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 hereafter 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 not less than a rate determined by the Secretary, taking into consideration the current average yield on outstanding marketable obligations of the United States of comparable maturity. (D) SECRETARY
LIGATIONS.The AUTHORIZED TO SELL OB-
Secretary may sell, upon such
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371 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
CIAL
terms and conditions and at such price or prices 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 covered into the Treasury as miscellaneous receipts. (o) RECOVERY COMPANIES. (1) RISK-BASED
ASSESSMENTS.The OF
EXPENDED FUNDS FROM FINAN-
Corpora-
tion shall recover the amount of funds expended out of the Fund under subsection (n) and which have not otherwise been recouped. Steps to recover such amounts shall include one or more risk-based assessments on financial companies in such amount and manner, and subject to such terms and conditions that the Corporation determines, with the concurrence of the Secretary and the Federal Reserve Board, are necessary to pay in full the obligations issued by Corporation to the Secretary, within 60 months from the date of the Secretarys determina-
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372 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 tion under section 1603(b). The Corporation may, with the approval of the Secretary and the Federal Reserve Board, extend this time period if the Corporation determines that an extension is necessary to avoid having a serious adverse effect on the financial system or economic conditions in the United States. (2) ASSESSMENT
THRESHOLD AND GRADUATED
ASSESSMENT RATE.The
Corporation shall not as-
sess any financial company whose total assets on a consolidated basis are less than $10 billion. The Corporation shall assess any financial company with $10 billion or more in total consolidated assets on a graduated basis that assesses financial companies with greater assets at a higher rate. (3) RISK-BASED
ASSESSMENT CONSIDER-
ATIONS.In
imposing assessments under para-
graphs (1) and (2), the Corporation shall (A) take into account economic conditions generally affecting financial companies so as to allow assessments to be lower during less favorable economic conditions; (B) take into account any assessments imposed on a subsidiary of a financial company that is
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373 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (i) an insured depository institution pursuant to section 7 or section
13(c)(4)(G) of the Federal Deposit Insurance Act (12 U.S.C. 1817 and
1823(c)(4)(G)); (ii) a member of the Securities Investor Protection Corporation pursuant to section 4 of the Securities Investor Protection Act of 1970 (15 U.S.C. 78ddd); or (iii) an insurance company pursuant to applicable State law to cover (or reimburse payments made to cover) the costs of rehabilitation, liquidation, or other State insolvency proceeding with respect to one or more insurance companies. (C) take into account the risks presented by the financial company to financial stability or the U.S. economy and the extent to which the financial company has, benefitted, or likely would benefit, from the resolution of a financial company under this Act; (D) take into account such other factors as the Corporation deems appropriate; (E) distinguish among different classes of assets or different types of financial companies
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374 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 in order to establish comparable assessment bases among financial companies subject to this subsection; and (F) establish the parameters for the graduated assessment regime described in paragraph (2). (4) COLLECTION
OF INFORMATION.The
Cor-
poration may impose on financial companies such collection of information requirements that the Corporation deems necessary to carry out this subsection after a determination under section 1603(b). (5) RULEMAKING.The Corporation shall, in consultation with the Secretary and the Federal Reserve Board, prescribe regulations to carry out this subsection. (p) NO FEDERAL STATUS. (1) AGENCY
STATUS.A
covered financial com-
pany (or any covered subsidiary thereof) that is placed into receivership or qualified receivership is not a department, agency, or instrumentality of the United States for purposes of statutes that confer powers on or impose obligations on government entities. (2) EMPLOYEE
STATUS.Interim
directors, di-
rectors, officers, employees, or agents of a covered
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375 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 financial company that is placed into receivership or qualified receivership are not, solely by virtue of service in any such capacity, officers or employees of the United States. Any employee of the Corporation, acting as receiver or qualified receiver, or of any Federal agency who serves at the request of the receiver or qualified receiver as an interim director, director, officer, employee, or agent of a covered financial company that is placed into receivership or qualified receivership shall not (A) 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; (B) receive any salary or benefits for service in any such capacity with respect to a covered financial company that is placed into receivership or qualified receivership in addition to such salary or benefits as are obtained through employment with the Corporation or other Federal agency.
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376 1 2 3 4 5
SEC. 1610. CLARIFICATION OF PROHIBITION REGARDING CONCEALMENT OF ASSETS FROM QUALIFIED RECEIVER, AGENT. RECEIVER, OR LIQUIDATING
(a) IN GENERAL.Section 1032 of title 18, United
6 States Code, is amended in paragraph (1) by deleting or 7 before the National Credit Union Administration 8 Board, and by inserting immediately thereafter or the 9 Corporation, as defined in section 1602 of the Resolution 10 Authority for Large, Interconnected Financial Companies 11 Act of 2009,. 12 (b) CONFORMING CHANGE.The heading of section
13 1032 of title 18, United States Code, is amended by strik14 ing of financial institution. 15 16
SEC. 1611. MISCELLANEOUS PROVISIONS.
(a) BANKRUPTCY CODE AMENDMENTS.Section
17 109(b)(2) of title 11 of the United States Code is amended 18 by inserting covered financial company (as that term is 19 defined in section 1602(5) of the Resolution Authority for 20 Large, Interconnected Financial Companies Act of 21 2009), after a domestic insurance company,. 22 23 (b) FEDERAL DEPOSIT INSURANCE ACT
ERAL AND
FED-
DEPOSIT INSURANCE CORPORATION IMPROVEMENT
24 ACT OF 1991. 25 26 (1) Section 18(c)(4)(G)(i) of the Federal Deposit Insurance Act (12 U.S.C. 1823(c)(4)(G)(i)) is
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377 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 amended by inserting at the end the following new sentence: The determination with regard to the Corporations exercise of authority under this subparagraph shall apply to only an insured depository institution except when severe financial conditions exist which threaten the stability of a significant number of insured depository institutions.. (2) Section 403(a) of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 4403(a)) is amended by inserting section 1609(c) of the Resolution Authority for Large, Interconnected Financial Companies Act of 2009, 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,.
Subtitle HAdditional Improvements for Financial Crisis Management

SEC. 1701. ADDITIONAL IMPROVEMENTS FOR FINANCIAL CRISIS MANAGEMENT.
Section 13 of the Federal Reserve Act is amended
23 in the 3rd undesignated paragraph (12 U.S.C. 343) to 24 read as follows:
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378 1 In unusual and exigent circumstances, the Board of
2 Governors of the Federal Reserve System, by the affirma3 tive vote of not less than five members and with the writ4 ten concurrence of the Secretary of the Treasury, may au5 thorize any Federal reserve bank, during such periods as 6 the said board may determine, at rates established in ac7 cordance with the provisions of section 14, subdivision (d) 8 of this Act (12 U.S.C. 357), to discount for an individual, 9 partnership, or corporation, notes, drafts, and bills of ex10 change when such notes, drafts, and bills of exchange are 11 indorsed or otherwise secured to the satisfaction of the 12 Federal reserve bank: Provided, That the Board of Gov13 ernors of the Federal Reserve System may authorize a 14 Federal reserve bank to discount notes, drafts, or bills of 15 exchange under this section only as part of a broadly avail16 able credit or other facility and may not authorize a Fed17 eral Reserve bank to discount notes, drafts, or bills of ex18 change for only a single and specific individual, partner19 ship, or corporation: And provided further that before dis20 counting any such note, draft, or bill of exchange for an 21 individual, a partnership or corporation the Federal re22 serve bank shall obtain evidence that such individual, part23 nership, or corporation is unable to secure adequate credit 24 accommodations from other banking institutions. All dis25 counts under this paragraph for individuals, partnerships,
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379 1 or corporations shall be subject to such limitations, restric2 tions, and regulations as the Board of Governors of the 3 Federal Reserve System may prescribe..
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111TH CONGRESS 1ST SESSION
H. R. 3904
To amend the Truth in Lending Act to establish fair and transparent practices related to the marketing and provision of overdraft coverage programs at depository institutions, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES

OCTOBER 22, 2009 Mrs. MALONEY (for herself, Mr. FRANK of Massachusetts, Ms. WATERS, Mr. MAFFEI, Mr. MILLER of North Carolina, Mr. HINOJOSA, Ms. MOORE of Wisconsin, Mr. HODES, Mr. CAPUANO, Mr. ACKERMAN, Mr. KANJORSKI, Mr. ELLISON, Mr. GUTIERREZ, Ms. SPEIER, Ms. ESHOO, and Mr. JONES) introduced the following bill; which was referred to the Committee on Financial Services
A BILL
To amend the Truth in Lending Act to establish fair and transparent practices related to the marketing and provision of overdraft coverage programs at depository institutions, and for other purposes. 1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled, 3 4

SECTION 1. SHORT TITLE.
This Act may be cited as the Overdraft Protection
5 Act of 2009.
2 1 2
SEC. 2. FINDINGS AND PURPOSE.
Section 102 of the Truth in Lending Act (15 U.S.C.
3 1601) is amended by adding at the end the following new 4 subsection: 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 (c) FAIRNESS
DRAFT AND
ACCOUNTABILITY
IN
OVER-
COVERAGE. (1) FINDINGS.The Congress also finds
that (A) overdraft coverage is a form of shortterm credit that depository institutions provide for consumer transaction accounts. Historically, depository institutions covered overdrafts for a fee on an ad hoc basis; (B) with the growth in specially designed software programs and in consumer use of debit cards, overdraft coverage for a fee has become more prevalent; (C) most depository institutions do not notify consumers when adding this feature to their transaction accounts, and some do not permit consumers to eliminate this feature from such accounts; (D) most depository institutions collect a high flat fee, including for small dollar transactions, each time the institution covers an overdraft, in some cases impose multiple overHR 3904 IH
3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 draft coverage fees within a single day, and many charge additional fees for each day during which the account remains overdrawn; and (E) such abusive and misleading practices in connection with overdraft coverage fees have deprived consumers of meaningful choices about their accounts and placed significant financial burdens on low- and moderate-income consumers. (2) PURPOSE.It is the purpose of this title to protect consumers by limiting abusive and misleading overdraft coverage fees and practices, and by providing meaningful disclosures and consumer choice in connection with overdraft coverage fees..
(a) ADDITIONAL DEFINITIONS.Section 103 of the
17 Truth in Lending Act (15 U.S.C. 1602) is amended by 18 adding at the end the following new subsection: 19 20 21 22 23 24 (cc) DEFINITIONS RELATING
ERAGE. TO
OVERDRAFT COV-
(1) CHECK.The term check has the same meaning as in section 3(6) of the Check Clearing for the 21st Century Act (12 U.S.C. 5001 et seq.), other than a travelers check.
HR 3904 IH
4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (2) DEPOSITORY
INSTITUTION.The
term de-
pository institution has the same meaning as in clauses (i) through (vi) of section 19(b)(1)(A) of the Federal Reserve Act (12 U.S.C. 461(b)(1)(A)). (3) NONSUFFICIENT
FUND FEE.The
term
nonsufficient fund fee means a fee or charge assessed in connection with an overdraft for which a depository institution declines payment. (4) OVERDRAFT.The term overdraft means the amount of a withdrawal by check or other debit from a transaction account in which there are insufficient or unavailable funds in the account to cover such check or debit. (5) OVERDRAFT
COVERAGE.The
term over-
draft coverage means the payment of a check presented or other debit posted against a transaction account by the depository institution in which such account is held, even though there are insufficient or unavailable funds in the account to cover such checks or other debits. (6) OVERDRAFT
COVERAGE FEE.The
term
overdraft coverage fee means any fee or charge assessed in connection with overdraft coverage, or in connection with any negative account balance that
HR 3904 IH
5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 results from overdraft coverage, unless such fee or charge is imposed in connection with (A) an extension of credit through an overdraft line of credit program where such fee or charge was considered a finance charge under this title as in effect immediately prior to the enactment of the Overdraft Protection Act of 2009; or (B) any transfer from an account linked to another transaction account. Such fee shall be considered a finance charge for purposes of section 106(a), but shall not be included in the calculation of the rate of interest for purposes of section 107(5)(A)(vi) of the Federal Credit Union Act (12 U.S.C. 1757(5)(A)(vi)) (7) OVERDRAFT
COVERAGE PROGRAM.The
term overdraft coverage program means a service under which a depository institution assesses an overdraft coverage fee for overdraft coverage. (8) TRANSACTION
ACCOUNT.The
term
transaction account has the same meaning as in section 19(b)(1)(C) of the Federal Reserve Act (12 U.S.C. 461(b)(1)(C)).. (b) CONFORMING AMENDMENT.Section
25 107(5)(A)(vi) of the Federal Credit Union Act (12 U.S.C.
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6 1 1757(5)(A)(vi)) is amended by inserting , other than an 2 overdraft coverage fee, as defined in section 103(cc) of the 3 Truth in Lending Act (12 U.S.C. 1602(cc)) after inclu4 sive of all finance charges. 5 6 7
SEC. 4. FAIR MARKETING AND PROVISION OF OVERDRAFT COVERAGE PROGRAMS.
Chapter 2 of the Truth in Lending Act (15 U.S.C.
8 1631 et seq.) is amended by adding at the end the fol9 lowing new section: 10 11 12
SEC. 140B. OVERDRAFT COVERAGE PROGRAM DISCLOSURES AND CONSUMER PROTECTION.
(a) PROHIBITIONS.No depository institution may
13 engage in acts or practices in connection with the mar14 keting of or the provision of overdraft coverage that are 15 unfair, deceptive, or designed to evade the provisions of 16 this section. 17 (b) MARKETING DISCLOSURES.Each depository
18 institution that provides or offers to provide overdraft cov19 erage with respect to transaction accounts held at that de20 pository institution shall clearly and conspicuously disclose 21 in all marketing materials for such overdraft coverage any 22 overdraft coverage fees. 23 (c) CONSUMER CONSENT OPT-IN.A depository in-
24 stitution may charge overdraft coverage fees only if the 25 consumer has consented in writing, in electronic form, or
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7 1 in such other form as is permitted under regulations of 2 the Board. 3 (d) CONSUMER DISCLOSURES.Each depository in-
4 stitution shall clearly disclose to each consumer covered 5 by an overdraft protection program of that depository in6 stitution 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (1) that (A) the consumer may be charged for not more than one overdraft coverage fee in any single calendar month and not more than 6 overdraft coverage fees in any single calendar year, per transaction account; and (B) the depository institution retains the discretion to pay (without assessing an overdraft coverage fee) or reject overdrafts incurred by the consumer beyond the numbers described in subparagraph (A); (2) information about any alternative overdraft products that are available, including a clear explanation of how the terms and fees for such alternative services and products differ; and (3) such other information as the Board may require, by rule. (e) PERIODIC STATEMENTS.Each depository insti-
25 tution that offers an overdraft coverage program shall, in
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8 1 each periodic statement for any transaction account that 2 has an overdraft coverage program feature, clearly disclose 3 to the consumer the dollar amount of all overdraft cov4 erage fees charged to the consumer for the relevant period 5 and year to date. 6 7 (f) EXCLUSION FROM ACCOUNT BALANCE INFORMATION.No
depository institution may include the
8 amount available under the overdraft coverage program of 9 a consumer as part of the transaction account balance of 10 that consumer. 11 (g) PROMPT NOTIFICATION.Each depository insti-
12 tution shall promptly notify consumers, through a reason13 able means selected by the consumer, when overdraft cov14 erage has been accessed with respect to the account of 15 the consumer, not later than on the day on which such 16 access occurs, including 17 18 19 20 21 22 23 24 (1) the date of the transaction; (2) the type of transaction; (3) the overdraft amount; (4) the overdraft coverage fee; (5) the amount necessary to return the account to a positive balance; and (6) whether the participation of a consumer in an overdraft coverage program will be terminated if
HR 3904 IH
9 1 2 3 the account is not returned to a positive balance within a given time period. (h) TERMINATED
OR
SUSPENDED COVERAGE.
4 Each depository institution shall provide prompt notice to 5 the consumer, using a reasonable means selected by the 6 consumer, if the institution terminates or suspends access 7 to an overdraft coverage program with respect to an ac8 count of the consumer, including a clear rationale for the 9 action. 10 (i) NOTICE
AND
OPPORTUNITY TO CANCEL.Each
11 depository institution shall 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (1) warn any consumer covered by an overdraft coverage program who engages in a transaction through an automated teller machine or a branch teller if completing the transaction would trigger overdraft coverage fees, including the amount of the fees; and (2) provide to the consumer the opportunity to cancel the transaction before it is completed. (j) OVERDRAFT COVERAGE FEE LIMITS. (1) FREQUENCY.A depository institution may charge not more than one overdraft coverage fee in any single calendar month, and not more than 6 overdraft coverage fees in any single calendar year, per transaction account.
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10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (2) REASONABLE
AND PROPORTIONAL OVER-
DRAFT COVERAGE FEES.
(A) IN
GENERAL.The
amount of any
overdraft coverage fee that a depository institution may assess for paying a transaction (including a check or other debit) shall be reasonable and proportional to the cost of processing the transaction. (B) SAFE
HARBOR RULE AUTHORIZED.
The Board, in consultation with the Comptroller of the Currency, the Board of Directors of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the National Credit Union Administration Board, may issue rules to provide an amount for any overdraft coverage fee that is presumed to be reasonable and proportional to the actual cost of processing the transaction. (3) POSTING
ORDER.In
order to minimize
overdraft coverage fees charged to consumers, each depository institution shall post transactions with respect to transaction accounts in such a manner that the consumer does not incur avoidable overdraft coverage fees.
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11 1 (k) DEBIT HOLDS.No depository institution may
2 charge an overdraft coverage fee on any category of trans3 action, if the overdraft results solely from a debit hold 4 amount placed on a transaction account that exceeds the 5 actual dollar amount of the transaction. 6 (l) NONDISCRIMINATION
FOR
NOT OPTING
IN.In
7 implementing the requirements of this section, each depos8 itory institution shall provide to consumers who have not 9 consented to participate in an overdraft coverage program, 10 transaction accounts having the same terms, conditions, 11 or other features as those that are provided to consumers 12 who have consented to participate in such overdraft cov13 erage program, except for features of such overdraft cov14 erage. 15 (m) NONSUFFICIENT FUND FEE LIMITS.No de-
16 pository institution may charge any nonsufficient fund fee 17 with respect to 18 19 20 21 22 (1) any transaction at an automated teller machine; or (2) any debit card transaction. (n) REPORTS
CIES.No TO
CONSUMER REPORTING AGEN-
depository institution may report negative in-
23 formation regarding the use of overdraft coverage by a 24 consumer to any consumer reporting agency (as that term 25 is defined in section 603 of the Fair Credit Reporting Act
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12 1 (15 U.S.C. 1681a)) when the overdraft amounts and over2 draft coverage fees are paid under the terms of an over3 draft coverage program. 4 (o) RULE
OF
CONSTRUCTION.No provision of this
5 section may be construed as prohibiting a depository insti6 tution from retaining the discretion to pay, without assess7 ing an overdraft coverage fee or charge, an overdraft in8 curred by a consumer.. 9 10
SEC. 5. REGULATORY AUTHORITY OF THE BOARD.
(a) IN GENERAL.Not later than 9 months after the
11 date of the enactment of this Act (except as provided in 12 subsection (b)), the Board of Governors of the Federal Re13 serve System (hereafter in this Act referred to as the 14 Board), in consultation with the Comptroller of the Cur15 rency, the Board of Directors of the Federal Deposit In16 surance Corporation, the Director of the Office of Thrift 17 Supervision, and the National Credit Union Administra18 tion Board, shall issue such final rules and publish such 19 model forms as necessary to carry out section 140B of 20 the Truth in Lending Act, as added by this Act. 21 (b) BOARD AUTHORITY REGARDING ADDITIONAL
22 WARNINGS.The Board may, by rule, after taking into 23 account the findings of the Comptroller General of the 24 United States under section 6, require warnings at loca25 tions such as point-of-sale transfer terminals or other loca-
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13 1 tions, that are similar to those required under section 2 140B(i) of the Truth in Lending Act, as added by this 3 Act, where feasible, and if the cost of providing such warn4 ings does not outweigh the benefit to consumers. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
SEC. 6. STUDY AND REPORT BY THE GAO.
(a) STUDY. (1) IN

GENERAL.The
Comptroller General of
the United States shall conduct a study regarding whether it is feasible for a depository institution (A) to provide a warning to a consumer at a point-of-sale transfer terminal that completing a transfer may trigger overdraft coverage fees; and (B) to provide the consumer with the opportunity to cancel the point-of-sale transfer before the transaction is completed. (2) CONSIDERATIONS.In conducting the study under this subsection, the Comptroller General shall evaluate (A) the benefits to consumers of a pointof-sale transfer overdraft warning and opportunity to cancel; (B) the availability of technology to provide such a warning and opportunity; and
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14 1 2 3 (C) the cost of providing such warning and opportunity. (b) REPORT
TO
CONGRESS.Not later than 1 year
4 after the date of enactment of this Act, the Comptroller 5 General shall submit a report to Congress on the results 6 of the study conducted under subsection (a). 7 (c) DEFINITIONS.As used in this section, the terms
8 overdraft coverage program, overdraft coverage fee, 9 and depository institution have the same meanings as 10 in section 103(cc) of the Truth in Lending Act, as added 11 by this Act. 12 13
SEC. 7. EFFECTIVE DATE.
(a) IN GENERAL.This Act and the amendments
14 made by this Act shall take effect 1 year after the date 15 of the enactment of this Act, whether or not the rules of 16 the Board under this Act or such amendments are pre17 scribed in final form. 18 19 20 21 22 23 24 25 (b) MORATORIUM ON FEE INCREASES. (1) IN
GENERAL.During
the 1-year period be-
ginning on the date of the enactment of this Act, no depository institution may increase the overdraft coverage fees or charges assessed on transaction accounts for paying a transaction (including a check or other debit) in connection with an overdraft or for nonsufficient funds.
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15 1 2 3 4 5 6 (2) DEFINITIONS.As used in this section, the terms depository institution, overdraft, overdraft coverage fee, transaction account and nonsufficient fund fee have the same meanings as in section 103(cc) of the Truth in Lending Act, as added by this Act.
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BARNEY FRANK, MA, CHAIRMAN
United States House of Representatives
SPENCER BACHUS, AL, RANKING MEMBER

Washington, D.C. 20515
October 29, 2009
MARKUP NOTICE
The Committee on Financial Services will meet in open session on Tuesday, November 3, 2009, (and subsequent days if necessary) after the conclusion of consideration of amendments to the Investor Protection Act in room 2128 Rayburn House Office Building to consider the following measures: (1) Amendment in the nature of a substitute October 16, 2009, to H.R. 2609, Federal Insurance Office Act of 2009; (2) Committee Print (October 29, 2009) of the Financial Stability Improvement Act of 2009; and (3) H.R. 3904, Overdraft Protection Act. The Chair will provide priority in recognition for purposes of offering an amendment to Members who file 100 copies of the amendment with the Committees General Counsel not later than 4:30 p.m. on Monday, November 2, 2009, in room 2129 Rayburn House Office Building. Electronic copies of amendments should also be e-mailed to Tom.Duncan@ mail.house.gov in order to facilitate distribution of amendments to Member offices. The Chair announces that he may postpone record votes on amendments to the measure to be considered pursuant to the rules of the Committee and the House. Members are reminded that, pursuant to the Chairs policy regarding postponed votes, it is important that Members inform the Chair of potential amendments as soon as possible to ensure that they are not prejudiced in the offering of amendments through the use of this authority. If you have any questions regarding the markup, contact the Committee staff at extension 5-4247.

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TITLE IFINANCIAL STABILITY IMPROVEMENT

DISCUSSION DRAFT 10/27/2009

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SUBTITLE A THE FINANCIAL SERVICES OVERSIGHT COUNCIL

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8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 dispute; and, REGULATORY AGENCIES.

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10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Secretary of the Treasury

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20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 SUBSIDIARY DEPOSITORY INSTITUTIONS.

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24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 relevant capital measure.

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undercapitalized identified financial holding company shall not,

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34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 with another company).

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43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 agency ordinarily is responsible.

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SUBTITLE CIMPROVEMENTS TO SUPERVISION AND REGULATION OF FEDERAL DEPOSITORY INSTITUTIONS

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50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 amended (A) by striking paragraph (1) and (3); and

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51 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Sec. 3. Division of Thrift Supervision..

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