senate financial reform s3217

8/9/2019 Senate Financial Reform S3217

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Calendar No. 349

111TH CONGRESS2D SESSION S. 3217

To promote the financial stability of the United States by improving account-

ability and transparency in the financial system, to end too big to

fail, to protect the American taxpayer by ending bailouts, to protect

consumers from abusive financial services practices, and for other pur-

poses.

IN THE SENATE OF THE UNITED STATES

APRIL 15, 2010

Mr. DODD, from the Committee on Banking, Housing, and Urban Affairs, re-

ported the following original bill; which was read twice and placed on the

calendar

A BILL

To promote the financial stability of the United States by

improving accountability and transparency in the finan-

cial system, to end too big to fail, to protect the

American taxpayer by ending bailouts, to protect con-

sumers from abusive financial services practices, and for

other purposes.

Be it enacted by the Senate and House of Representa-1

tives of the United States of America in Congress assembled,2

VerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217


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SECTION 1. SHORT TITLE; TABLE OF CONTENTS.1

(a) SHORT TITLE.This Act may be cited as the2

Restoring American Financial Stability Act of 2010.3

(b) T ABLE OF CONTENTS.The table of contents for4

this Act is as follows:5

Sec. 1. Short title; table of contents.

Sec. 2. Definitions.

Sec. 3. Severability.

Sec. 4. Effective date.

TITLE IFINANCIAL STABILITY

Sec. 101. Short title.


Subtitle AFinancial Stability Oversight Council

Sec. 111. Financial Stability Oversight Council established.

Sec. 112. Council authority.

Sec. 113. Authority to require supervision and regulation of certain nonbank fi-

nancial companies.

Sec. 114. Registration of nonbank financial companies supervised by the Board

of Governors.

Sec. 115. Enhanced supervision and prudential standards for nonbank financial

companies supervised by the Board of Governors and certain

bank holding companies.

Sec. 116. Reports.

Sec. 117. Treatment of certain companies that cease to be bank holding compa-nies.

Sec. 118. Council funding.

Sec. 119. Resolution of supervisory jurisdictional disputes among member agen-

cies.

Sec. 120. Additional standards applicable to activities or practices for financial

stability purposes.

Sec. 121. Mitigation of risks to financial stability.

Subtitle BOffice of Financial Research


Sec. 152. Office of Financial Research established.

Sec. 153. Purpose and duties of the Office.

Sec. 154. Organizational structure; responsibilities of primary programmatic

units.

Sec. 155. Funding.

Sec. 156. Transition oversight.

Subtitle CAdditional Board of Governors Authority for Certain Nonbank

Financial Companies and Bank Holding Companies

Sec. 161. Reports by and examinations of nonbank financial companies super-

vised by the Board of Governors.



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Sec. 162. Enforcement.

Sec. 163. Acquisitions.

Sec. 164. Prohibition against management interlocks between certain financial

companies.

Sec. 165. Enhanced supervision and prudential standards for nonbank financial

companies supervised by the Board of Governors and certain

bank holding companies.Sec. 166. Early remediation requirements.

Sec. 167. Affiliations.

Sec. 168. Regulations.

Sec. 169. Avoiding duplication.

Sec. 170. Safe harbor.

TITLE IIORDERLY LIQUIDATION AUTHORITY


Sec. 202. Orderly Liquidation Authority Panel.

Sec. 203. Systemic risk determination.

Sec. 204. Orderly liquidation.

Sec. 205. Orderly liquidation of covered brokers and dealers.

Sec. 206. Mandatory terms and conditions for all orderly liquidation actions.

Sec. 207. Directors not liable for acquiescing in appointment of receiver.

Sec. 208. Dismissal and exclusion of other actions.

Sec. 209. Rulemaking; non-conflicting law.

Sec. 210. Powers and duties of the corporation.

Sec. 211. Miscellaneous provisions.

TITLE IIITRANSFER OF POWERS TO THE COMPTROLLER OF

THE CURRENCY, THE CORPORATION, AND THE BOARD OF GOV-

ERNORS


Sec. 301. Purposes.

Sec. 302. Definition.

Subtitle ATransfer of Powers and Duties

Sec. 311. Transfer date.

Sec. 312. Powers and duties transferred.

Sec. 313. Abolishment.

Sec. 314. Amendments to the Revised Statutes.

Sec. 315. Federal information policy.

Sec. 316. Savings provisions.

Sec. 317. References in Federal law to Federal banking agencies.

Sec. 318. Funding.

Sec. 319. Contracting and leasing authority.

Subtitle BTransitional Provisions

Sec. 321. Interim use of funds, personnel, and property.

Sec. 322. Transfer of employees.

Sec. 323. Property transferred.

Sec. 324. Funds transferred.

Sec. 325. Disposition of affairs.

Sec. 326. Continuation of services.

Subtitle CFederal Deposit Insurance Corporation



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Sec. 331. Deposit insurance reforms.

Sec. 332. Management of the Federal Deposit Insurance Corporation.

Subtitle DTermination of Federal Thrift Charter

Sec. 341. Termination of Federal savings associations.

Sec. 342. Branching.

TITLE IVREGULATION OF ADVISERS TO HEDGE FUNDS AND

OTHERS



Sec. 403. Elimination of private adviser exemption; limited exemption for for-

eign private advisers; limited intrastate exemption.

Sec. 404. Collection of systemic risk data; reports; examinations; disclosures.

Sec. 405. Disclosure provision eliminated.

Sec. 406. Clarification of rulemaking authority.

Sec. 407. Exemption of venture capital fund advisers.

Sec. 408. Exemption of and record keeping by private equity fund advisers.

Sec. 409. Family offices.Sec. 410. State and Federal responsibilities; asset threshold for Federal reg-

istration of investment advisers.

Sec. 411. Custody of client assets.

Sec. 412. Adjusting the accredited investor standard for inflation.

Sec. 413. GAO study and report on accredited investors.

Sec. 414. GAO study on self-regulatory organization for private funds.

Sec. 415. Commission study and report on short selling.

Sec. 416. Transition period.

TITLE VINSURANCE

Subtitle AOffice of National Insurance


Sec. 502. Establishment of Office of National Insurance.

Subtitle BState-based Insurance Reform



PART INONADMITTED INSURANCE

Sec. 521. Reporting, payment, and allocation of premium taxes.

Sec. 522. Regulation of nonadmitted insurance by insureds home State.

Sec. 523. Participation in national producer database.

Sec. 524. Uniform standards for surplus lines eligibility.Sec. 525. Streamlined application for commercial purchasers.

Sec. 526. GAO study of nonadmitted insurance market.


PART IIREINSURANCE

Sec. 531. Regulation of credit for reinsurance and reinsurance agreements.

Sec. 532. Regulation of reinsurer solvency.




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PART IIIRULE OF CONSTRUCTION

Sec. 541. Rule of construction.

Sec. 542. Severability.

TITLE VIIMPROVEMENTS TO REGULATION OF BANK AND SAV-

INGS ASSOCIATION HOLDING COMPANIES AND DEPOSITORY IN-

STITUTIONS


Sec. 602. Definition.

Sec. 603. Moratorium and study on treatment of credit card banks, industrial

loan companies, and certain other companies under the Bank

Holding Company Act of 1956.

Sec. 604. Reports and examinations of holding companies; regulation of func-

tionally regulated subsidiaries.

Sec. 605. Assuring consistent oversight of permissible activities of depository

institution subsidiaries of holding companies.

Sec. 606. Requirements for financial holding companies to remain well capital-

ized and well managed.

Sec. 607. Standards for interstate acquisitions.Sec. 608. Enhancing existing restrictions on bank transactions with affiliates.

Sec. 609. Eliminating exceptions for transactions with financial subsidiaries.

Sec. 610. Lending limits applicable to credit exposure on derivative trans-

actions, repurchase agreements, reverse repurchase agree-

ments, and securities lending and borrowing transactions.

Sec. 611. Application of national bank lending limits to insured State banks.

Sec. 612. Restriction on conversions of troubled banks.

Sec. 613. De novo branching into States.

Sec. 614. Lending limits to insiders.

Sec. 615. Limitations on purchases of assets from insiders.

Sec. 616. Regulations regarding capital levels of holding companies.

Sec. 617. Elimination of elective investment bank holding company framework.

Sec. 618. Securities holding companies.

Sec. 619. Restrictions on capital market activity by banks and bank holding

companies.

Sec. 620. Concentration limits on large financial firms.

TITLE VIIIMPROVEMENTS TO REGULATION OF OVER-THE-

COUNTER DERIVATIVES MARKETS


Sec. 702. Findings and purposes.

Subtitle ARegulation of Swap Markets

Sec. 711. Definitions.Sec. 712. Jurisdiction.

Sec. 713. Clearing.

Sec. 714. Public reporting of aggregate swap data.

Sec. 715. Swap repositories.

Sec. 716. Reporting and recordkeeping.

Sec. 717. Registration and regulation of swap dealers and major swap partici-

pants.

Sec. 718. Segregation of assets held as collateral in swap transactions.

Sec. 719. Conflicts of interest.

Sec. 720. Alternative swap execution facilities.



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Sec. 721. Derivatives transaction execution facilities and exempt boards of

trade.

Sec. 722. Designated contract markets.

Sec. 723. Margin.

Sec. 724. Position limits.

Sec. 725. Enhanced authority over registered entities.

Sec. 726. Foreign boards of trade.Sec. 727. Legal certainty for swaps.

Sec. 728. FDICIA amendments.

Sec. 729. Primary enforcement authority.

Sec. 730. Enforcement.

Sec. 731. Retail commodity transactions.

Sec. 732. Large swap trader reporting.

Sec. 733. Other authority.

Sec. 734. Antitrust.

Subtitle BRegulation of Security-Based Swap Markets

Sec. 751. Definitions under the Securities Exchange Act of 1934.

Sec. 752. Repeal of prohibition on regulation of security-based swaps.

Sec. 753. Amendments to the Securities Exchange Act of 1934.

Sec. 754. Segregation of assets held as collateral in security-based swap trans-

actions.

Sec. 755. Reporting and recordkeeping.

Sec. 756. State gaming and bucket shop laws.

Sec. 757. Amendments to the Securities Act of 1933; treatment of security-

based swaps.


Sec. 759. Jurisdiction.

Subtitle COther Provisions

Sec. 761. International harmonization.

Sec. 762. Interagency cooperation.

Sec. 763. Study and report on implementation.

Sec. 764. Recommendations for changes to insolvency laws.


TITLE VIIIPAYMENT, CLEARING, AND SETTLEMENT

SUPERVISION


Sec. 802. Findings and purposes.


Sec. 804. Designation of systemic importance.

Sec. 805. Standards for systemically important financial market utilities and

payment, clearing, or settlement activities.Sec. 806. Operations of designated financial market utilities.

Sec. 807. Examination of and enforcement actions against designated financial

market utilities.

Sec. 808. Examination of and enforcement actions against financial institutions

subject to standards for designated activities.

Sec. 809. Requests for information, reports, or records.

Sec. 810. Rulemaking.





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TITLE IXINVESTOR PROTECTIONS AND IMPROVEMENTS TO

THE REGULATION OF SECURITIES

Subtitle AIncreasing Investor Protection

Sec. 911. Investor Advisory Committee established.

Sec. 912. Clarification of authority of the Commission to engage in investor

testing.Sec. 913. Study and rulemaking regarding obligations of brokers, dealers, and

investment advisers.

Sec. 914. Office of the Investor Advocate.

Sec. 915. Streamlining of filing procedures for self-regulatory organizations.

Sec. 916. Study regarding financial literacy among investors.

Sec. 917. Study regarding mutual fund advertising.

Sec. 918. Clarification of Commission authority to require investor disclosures

before purchase of investment products and services.

Sec. 919. Study on conflicts of interest.

Sec. 919A. Study on improved investor access to information on investment ad-

visers and broker-dealers.

Sec. 919B. Study on financial planners and the use of financial designations.

Subtitle BIncreasing Regulatory Enforcement and Remedies

Sec. 921. Authority to issue rules related to mandatory predispute arbitration.

Sec. 922. Whistleblower protection.

Sec. 923. Conforming amendments for whistleblower protection.

Sec. 924. Implementation and transition provisions for whistleblower protection.

Sec. 925. Collateral bars.

Sec. 926. Authority of State regulators over Regulation D offerings.

Sec. 927. Equal treatment of self-regulatory organization rules.

Sec. 928. Clarification that Section 205 of the Investment Advisers Act of 1940

does not apply to State-registered advisers.

Sec. 929. Unlawful margin lending.

Sec. 929A. Protection for employees of subsidiaries and affiliates of publicly

traded companies.

Sec. 929B. FAIR Fund amendments.

Sec. 929C. Increasing the borrowing limit on Treasury loans.

Subtitle CImprovements to the Regulation of Credit Rating Agencies

Sec. 931. Findings.

Sec. 932. Enhanced regulation, accountability, and transparency of nationally

recognized statistical rating organizations.

Sec. 933. State of mind in private actions.

Sec. 934. Referring tips to law enforcement or regulatory authorities.

Sec. 935. Consideration of information from sources other than the issuer in

rating decisions.Sec. 936. Qualification standards for credit rating analysts.

Sec. 937. Timing of regulations.

Sec. 938. Universal ratings symbols.

Sec. 939. Government Accountability Office study and Federal agency review of

required uses of nationally recognized statistical rating organi-

zation ratings.

Sec. 939A. Securities and Exchange Commission study on strengthening credit

rating agency independence.



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Sec. 939B. Government Accountability Office study on alternative business

models.

Sec. 939C. Government Accountability Office study on the creation of an inde-

pendent professional analyst organization.

Subtitle DImprovements to the Asset-Backed Securitization Process

Sec. 941. Regulation of credit risk retention.Sec. 942. Disclosures and reporting for asset-backed securities.

Sec. 943. Representations and warranties in asset-backed offerings.

Sec. 944. Exempted transactions under the Securities Act of 1933.

Sec. 945. Due diligence analysis and disclosure in asset-backed securities

issues.

Subtitle EAccountability and Executive Compensation

Sec. 951. Shareholder vote on executive compensation disclosures.

Sec. 952. Compensation committee independence.

Sec. 953. Executive compensation disclosures.

Sec. 954. Recovery of erroneously awarded compensation.

Sec. 955. Disclosure regarding employee and director hedging.Sec. 956. Excessive compensation by holding companies of depository institu-

tions.

Sec. 957. Voting by brokers.

Subtitle FImprovements to the Management of the Securities and

Exchange Commission

Sec. 961. Report and certification of internal supervisory controls.

Sec. 962. Triennial report on personnel management.

Sec. 963. Annual financial controls audit.

Sec. 964. Report on oversight of national securities associations.

Sec. 965. Compliance examiners.

Sec. 966. Suggestion program for employees of the Commission.

Subtitle GStrengthening Corporate Governance

Sec. 971. Election of directors by majority vote in uncontested elections.

Sec. 972. Proxy access.

Sec. 973. Disclosures regarding chairman and CEO structures.

Subtitle HMunicipal Securities

Sec. 975. Regulation of municipal securities and changes to the board of the

MSRB.

Sec. 976. Government Accountability Office study of increased disclosure to in-

vestors.

Sec. 977. Government Accountability Office study on the municipal securitiesmarkets.

Sec. 978. Study of funding for Government Accounting Standards Board.

Sec. 979. Commission Office of Municipal Securities.

Subtitle IPublic Company Accounting Oversight Board, Portfolio Margining,

and Other Matters

Sec. 981. Authority to share certain information with foreign authorities.

Sec. 982. Oversight of brokers and dealers.

Sec. 983. Portfolio margining.



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Sec. 984. Loan or borrowing of securities.

Sec. 985. Technical corrections to Federal securities laws.

Sec. 986. Conforming amendments relating to repeal of the Public Utility Hold-

ing Company Act of 1935.

Sec. 987. Amendment to definition of material loss and nonmaterial losses to

the Deposit Insurance Fund for purposes of Inspector General

reviews.Sec. 988. Amendment to definition of material loss and nonmaterial losses to

the National Credit Union Share Insurance Fund for purposes

of Inspector General reviews.

Sec. 989. Government Accountability Office study on proprietary trading.

Sec. 989A. Senior investor protections.

Sec. 989B. Changes in appointment of certain Inspectors General.

Subtitle JSelf-funding of the Securities and Exchange Commission

Sec. 991. Securities and Exchange Commission self-funding.

TITLE XBUREAU OF CONSUMER FINANCIAL PROTECTION

Sec. 1001. Short title.Sec. 1002. Definitions.

Subtitle ABureau of Consumer Financial Protection

Sec. 1011. Establishment of the Bureau.

Sec. 1012. Executive and administrative powers.

Sec. 1013. Administration.

Sec. 1014. Consumer Advisory Board.

Sec. 1015. Coordination.

Sec. 1016. Appearances before and reports to Congress.

Sec. 1017. Funding; penalties and fines.


Subtitle BGeneral Powers of the Bureau

Sec. 1021. Purpose, objectives, and functions.

Sec. 1022. Rulemaking authority.

Sec. 1023. Review of Bureau regulations.

Sec. 1024. Supervision of nondepository covered persons.

Sec. 1025. Supervision of very large banks, savings associations, and credit

unions.

Sec. 1026. Other banks, savings associations, and credit unions.

Sec. 1027. Limitations on authorities of the Bureau; preservation of authori-

ties.

Sec. 1028. Authority to restrict mandatory pre-dispute arbitration.


Subtitle CSpecific Bureau Authorities

Sec. 1031. Prohibiting unfair, deceptive, or abusive acts or practices.

Sec. 1032. Disclosures.

Sec. 1033. Consumer rights to access information.

Sec. 1034. Response to consumer complaints and inquiries.

Sec. 1035. Private education loan ombudsman.

Sec. 1036. Prohibited acts.




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Subtitle DPreservation of State Law

Sec. 1041. Relation to State law.

Sec. 1042. Preservation of enforcement powers of States.

Sec. 1043. Preservation of existing contracts.

Sec. 1044. State law preemption standards for national banks and subsidiaries

clarified.

Sec. 1045. Clarification of law applicable to nondepository institution subsidi-

aries.

Sec. 1046. State law preemption standards for Federal savings associations and

subsidiaries clarified.

Sec. 1047. Visitorial standards for national banks and savings associations.


Subtitle EEnforcement Powers


Sec. 1052. Investigations and administrative discovery.

Sec. 1053. Hearings and adjudication proceedings.

Sec. 1054. Litigation authority.

Sec. 1055. Relief available.Sec. 1056. Referrals for criminal proceedings.

Sec. 1057. Employee protection.


Subtitle FTransfer of Functions and Personnel; Transitional Provisions

Sec. 1061. Transfer of consumer financial protection functions.

Sec. 1062. Designated transfer date.

Sec. 1063. Savings provisions.

Sec. 1064. Transfer of certain personnel.

Sec. 1065. Incidental transfers.

Sec. 1066. Interim authority of the Secretary.

Sec. 1067. Transition oversight.

Subtitle GRegulatory Improvements

Sec. 1071. Collection of deposit account data.

Sec. 1072. Small business data collection.

Sec. 1073. GAO study on the effectiveness and impact of various appraisal

methods.

Sec. 1074. Prohibition on certain prepayment penalties.

Sec. 1075. Assistance for economically vulnerable individuals and families.

Sec. 1076. Remittance transfers.

Subtitle HConforming Amendments

Sec. 1081. Amendments to the Inspector General Act.Sec. 1082. Amendments to the Privacy Act of 1974.

Sec. 1083. Amendments to the Alternative Mortgage Transaction Parity Act of

1982.

Sec. 1084. Amendments to the Electronic Fund Transfer Act.

Sec. 1085. Amendments to the Equal Credit Opportunity Act.

Sec. 1086. Amendments to the Expedited Funds Availability Act.

Sec. 1087. Amendments to the Fair Credit Billing Act.

Sec. 1088. Amendments to the Fair Credit Reporting Act and the Fair and Ac-

curate Credit Transactions Act.



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(1) AFFILIATE.The term affiliate means1

any company that controls, is controlled by, or is2

under common control with another company.3

(2) APPROPRIATE FEDERAL BANKING AGEN-4

CY.On and after the transfer date, the term ap-5

propriate Federal banking agency has the same6

meaning as in section 3(q) of the Federal Deposit7

Insurance Act (12 U.S.C. 1813(q)), as amended by8

title III.9

(3) BOARD OF GOVERNORS.The term Board10

of Governors means the Board of Governors of the11

Federal Reserve System.12

(4) BUREAU.The term Bureau means the13

Bureau of Consumer Financial Protection estab-14

lished under title X.15

(5) COMMISSION.The term Commission16

means the Securities and Exchange Commission, ex-17

cept in the context of the Commodity Futures Trad-18

ing Commission.19

(6) CORPORATION.The term Corporation20

means the Federal Deposit Insurance Corporation.21

(7) COUNCIL.The term Council means the22

Financial Stability Oversight Council established23

under title I.24



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(8) CREDIT UNION.The term credit union1

means a Federal credit union, State credit union, or2

State-chartered credit union, as those terms are de-3

fined in section 101 of the Federal Credit Union Act4

(12 U.S.C. 1752).5

(9) FEDERAL BANKING AGENCY.The term6

(A) Federal banking agency means, indi-7

vidually, the Board of Governors, the Office of8

the Comptroller of the Currency, and the Cor-9

poration; and10

(B) Federal banking agencies means all11

of the agencies referred to in subparagraph (A),12

collectively.13

(10) FUNCTIONALLY REGULATED SUB-14

SIDIARY.The term functionally regulated sub-15

sidiary has the same meaning as in section 5(c)(5)16

of the Bank Holding Company Act of 1956 (1217

U.S.C. 1844(c)(5)).18

(11) PRIMARY FINANCIAL REGULATORY AGEN-19

CY.The term primary financial regulatory agen-20

cy means21

(A) the appropriate Federal banking agen-22

cy, with respect to institutions described in sec-23

tion 3(q) of the Federal Deposit Insurance Act,24

except to the extent that an institution is or the25



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activities of an institution are otherwise subject1

to the jurisdiction of an agency listed in sub-2

paragraph (B), (C), (D), or (E);3

(B) the Securities and Exchange Commis-4

sion, with respect to5

(i) any broker or dealer that is reg-6

istered with the Commission under the Se-7

curities Exchange Act of 1934;8

(ii) any investment company that is9

registered with the Commission under the10

Investment Company Act of 1940;11

(iii) any investment adviser that is12

registered with the Commission under the13

Investment Advisers Act of 1940, with re-14

spect to the investment advisory activities15

of such company and activities that are in-16

cidental to such advisory activities; and17

(iv) any clearing agency registered18

with the Commission under the Securities19

Exchange Act of 1934;20

(C) the Commodity Futures Trading Com-21

mission, with respect to any futures commission22

merchant, any commodity trading adviser, and23

any commodity pool operator registered with24

the Commodity Futures Trading Commission25



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under the Commodity Exchange Act, with re-1

spect to the commodities activities of such enti-2

ty and activities that are incidental to such3

commodities activities;4

(D) the State insurance authority of the5

State in which an insurance company is domi-6

ciled, with respect to the insurance activities7

and activities that are incidental to such insur-8

ance activities of an insurance company that is9

subject to supervision by the State insurance10

authority under State insurance law; and11

(E) the Federal Housing Finance Agency,12

with respect to Federal Home Loan Banks or13

the Federal Home Loan Bank System, and14

with respect to the Federal National Mortgage15

Association or the Federal Home Loan Mort-16

gage Corporation.17

(12) PRUDENTIAL STANDARDS.The term18

prudential standards means enhanced supervision19

and regulatory standards developed by the Board of20

Governors under section 115 or 165.21

(13) SECRETARY.The term Secretary22

means the Secretary of the Treasury.23

(14) SECURITIES TERMS.The24



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(A) terms broker, dealer, issuer,1

nationally recognized statistical ratings organi-2

zation, security, and securities laws have3

the same meanings as in section 3 of the Secu-4

rities Exchange Act of 1934 (15 U.S.C. 78c);5

(B) term investment adviser has the6

same meaning as in section 202 of the Invest-7

ment Advisers Act of 1940 (15 U.S.C. 80b2);8

and9

(C) term investment company has the10

same meaning as in section 3 of the Investment11

Company Act of 1940 (15 U.S.C. 80a3).12

(15) STATE.The term State means any13

State, commonwealth, territory, or possession of the14

United States, the District of Columbia, the Com-15

monwealth of Puerto Rico, the Commonwealth of the16

Northern Mariana Islands, American Samoa, Guam,17

or the United States Virgin Islands.18

(16) TRANSFER DATE.The term transfer19

date means the date established under section 311.20

(17) OTHER INCORPORATED DEFINITIONS.21

(A) FEDERAL DEPOSIT INSURANCE ACT.22

The terms affiliate, bank, bank holding23

company, control (when used with respect to24

a depository institution), deposit, depository25



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institution, Federal depository institution,1

Federal savings association, foreign bank,2

including, insured branch, insured deposi-3

tory institution, national member bank,4

national nonmember bank, savings associa-5

tion, State bank, State depository institu-6

tion, State member bank, State non-7

member bank, State savings association,8

and subsidiary have the same meanings as in9

section 3 of the Federal Deposit Insurance Act10

(12 U.S.C. 1813).11

(B) HOLDING COMPANIES.The term12

(i) bank holding company has the13

same meaning as in section 2 of the Bank14

Holding Company Act of 1956 (12 U.S.C.15

1841);16

(ii) financial holding company has17

the same meaning as in section 2(p) of the18

Bank Holding Company Act of 1956 (1219

U.S.C. 1841(p)); and20

(iii) savings and loan holding com-21

pany has the same meaning as in section22

10 of the Home Owners Loan Act (1223

U.S.C. 1467a(a)).24



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SEC. 3. SEVERABILITY.1

If any provision of this Act, an amendment made by2

this Act, or the application of such provision or amend-3

ment to any person or circumstance is held to be unconsti-4

tutional, the remainder of this Act, the amendments made5

by this Act, and the application of the provisions of such6

to any person or circumstance shall not be affected there-7

by.8

SEC. 4. EFFECTIVE DATE.9

Except as otherwise specifically provided in this Act10

or the amendments made by this Act, this Act and such11

amendments shall take effect 1 day after the date of en-12

actment of this Act.13

TITLE IFINANCIAL STABILITY14

SEC. 101. SHORT TITLE.15

This title may be cited as the Financial Stability Act16

of 2010.17

SEC. 102. DEFINITIONS.18

(a) IN GENERAL.For purposes of this title, unless19

the context otherwise requires, the following definitions20

shall apply:21

(1) B ANK HOLDING COMPANY.The term22

bank holding company has the same meaning as23

in section 2 of the Bank Holding Company Act of24

1956 (12 U.S.C. 1841). A foreign bank or company25

that is treated as a bank holding company for pur-26



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poses of the Bank Holding Company Act of 1956,1

pursuant to section 8(a) of the International Bank-2

ing Act of 1978 (12 U.S.C. 3106(a)), shall be treat-3

ed as a bank holding company for purposes of this4

title.5

(2) CHAIRPERSON.The term Chairperson6

means the Chairperson of the Council.7

(3) MEMBER AGENCY.The term member8

agency means an agency represented by a voting9

member of the Council.10

(4) NONBANK FINANCIAL COMPANY DEFINI-11

TIONS.12

(A) FOREIGN NONBANK FINANCIAL COM-13

PANY.The term foreign nonbank financial14

company means a company (other than a com-15

pany that is, or is treated in the United States16

as, a bank holding company or a subsidiary17

thereof) that is18

(i) incorporated or organized in a19

country other than the United States; and20

(ii) substantially engaged in, including21

through a branch in the United States, ac-22

tivities in the United States that are finan-23

cial in nature (as defined in section 4(k) of24

the Bank Holding Company Act of 1956).25



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(B) U.S. NONBANK FINANCIAL COM-1

PANY.The term U.S. nonbank financial com-2

pany means a company (other than a bank3

holding company or a subsidiary thereof, or a4

Farm Credit System institution chartered and5

subject to the provisions of the Farm Credit6

Act of 1971 (12 U.S.C. 2001 et. seq.)) that7

is8

(i) incorporated or organized under9

the laws of the United States or any State;10

and11

(ii) substantially engaged in activities12

in the United States that are financial in13

nature (as defined in section 4(k) of the14

Bank Holding Company Act of 1956).15

(C) NONBANK FINANCIAL COMPANY.The16

term nonbank financial company means a17

U.S. nonbank financial company and a foreign18

nonbank financial company.19

(D) NONBANK FINANCIAL COMPANY SU-20

PERVISED BY THE BOARD OF GOVERNORS.21

The term nonbank financial company super-22

vised by the Board of Governors means a23

nonbank financial company that the Council24



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has determined under section 113 shall be su-1

pervised by the Board of Governors.2

(5) OFFICE OF FINANCIAL RESEARCH.The3

term Office of Financial Research means the of-4

fice established under section 152.5

(6) SIGNIFICANT INSTITUTIONS.The terms6

significant nonbank financial company and sig-7

nificant bank holding company have the meanings8

given those terms by rule of the Board of Governors.9

(b) DEFINITIONAL CRITERIA.The Board of Gov-10

ernors shall establish, by regulation, the criteria to deter-11

mine whether a company is substantially engaged in activi-12

ties in the United States that are financial in nature (as13

defined in section 4(k) of the Bank Holding Company Act14

of 1956) for purposes of the definitions of the terms U.S.15

nonbank financial company and foreign nonbank finan-16

cial company under subsection (a)(4).17

(c) FOREIGN NONBANK FINANCIAL COMPANIES.18

For purposes of the authority of the Board of Governors19

under this title with respect to foreign nonbank financial20

companies, references in this title to company or sub-21

sidiary include only the United States activities and sub-22

sidiaries of such foreign company.23



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Subtitle AFinancial Stability1

Oversight Council2

SEC. 111. FINANCIAL STABILITY OVERSIGHT COUNCIL ES-3

TABLISHED.4

(a) ESTABLISHMENT.Effective on the date of en-5

actment of this Act, there is established the Financial Sta-6

bility Oversight Council.7

(b) MEMBERSHIP.The Council shall consist of the8

following members:9

(1) VOTING MEMBERS.The voting members,10

who shall each have 1 vote on the Council shall be11

(A) the Secretary of the Treasury, who12

shall serve as Chairperson of the Council;13

(B) the Chairman of the Board of Gov-14

ernors;15

(C) the Comptroller of the Currency;16

(D) the Director of the Bureau;17

(E) the Chairman of the Commission;18

(F) the Chairperson of the Corporation;19

(G) the Chairperson of the Commodity Fu-20

tures Trading Commission;21

(H) the Director of the Federal Housing22

Finance Agency; and23



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(I) an independent member appointed by1

the President, by and with the advice and con-2

sent of the Senate, having insurance expertise.3

(2) NONVOTING MEMBERS.The Director of4

the Office of Financial Research5

(A) shall serve in an advisory capacity as6

a nonvoting member of the Council; and7

(B) may not be excluded from any of the8

proceedings, meetings, discussions, or delibera-9

tions of the Council.10

(c) TERMS; VACANCY.11

(1) TERMS.The independent member of the12

Council shall serve for a term of 6 years.13

(2) VACANCY.Any vacancy on the Council14

shall be filled in the manner in which the original15

appointment was made.16

(3) ACTING OFFICIALS MAY SERVE.In the17

event of a vacancy in the office of the head of a18

member agency or department, and pending the ap-19

pointment of a successor, or during the absence or20

disability of the head of a member agency or depart-21

ment, the acting head of the member agency or de-22

partment shall serve as a member of the Council in23

the place of that agency or department head.24



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(d) TECHNICAL AND PROFESSIONALADVISORY COM-1

MITTEES.The Council may appoint such special advi-2

sory, technical, or professional committees as may be use-3

ful in carrying out the functions of the Council, including4

an advisory committee consisting of State regulators, and5

the members of such committees may be members of the6

Council, or other persons, or both.7

(e) MEETINGS.8

(1) TIMING.The Council shall meet at the call9

of the Chairperson or a majority of the members10

then serving, but not less frequently than quarterly.11

(2) RULES FOR CONDUCTING BUSINESS.The12

Council shall adopt such rules as may be necessary13

for the conduct of the business of the Council. Such14

rules shall be rules of agency organization, proce-15

dure, or practice for purposes of section 553 of title16

5, United States Code.17

(f) VOTING.Unless otherwise specified, the Council18

shall make all decisions that it is authorized or required19

to make by a majority vote of the members then serving.20

(g) NONAPPLICABILITY OF FACA.The Federal Ad-21

visory Committee Act (5 U.S.C. App.) shall not apply to22

the Council, or to any special advisory, technical, or pro-23

fessional committee appointed by the Council, except that,24

if an advisory, technical, or professional committee has25



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one or more members who are not employees of or affili-1

ated with the United States Government, the Council shall2

publish a list of the names of the members of such com-3

mittee.4

(h) ASSISTANCE FROM FEDERAL AGENCIES.Any5

department or agency of the United States may provide6

to the Council and any special advisory, technical, or pro-7

fessional committee appointed by the Council, such serv-8

ices, funds, facilities, staff, and other support services as9

the Council may determine advisable.10

(i) COMPENSATION OF MEMBERS.11

(1) FEDERAL EMPLOYEE MEMBERS.All mem-12

bers of the Council who are officers or employees of13

the United States shall serve without compensation14

in addition to that received for their services as offi-15

cers or employees of the United States.16

(2) COMPENSATION FOR NON-FEDERAL MEM-17

BER.Section 5314 of title 5, United States Code,18

is amended by adding at the end the following:19

Independent Member of the Financial Stability20

Oversight Council (1)..21

(j) DETAIL OF GOVERNMENT EMPLOYEES.Any em-22

ployee of the Federal Government may be detailed to the23

Council without reimbursement, and such detail shall be24

without interruption or loss of civil service status or privi-25



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lege. An employee of the Federal Government detailed to1

the Council shall report to and be subject to oversight by2

the Council during the assignment to the Council, and3

shall be compensated by the department or agency from4

which the employee was detailed.5

SEC. 112. COUNCIL AUTHORITY.6

(a) PURPOSES AND DUTIES OF THE COUNCIL.7

(1) IN GENERAL.The purposes of the Council8

are9

(A) to identify risks to the financial sta-10

bility of the United States that could arise from11

the material financial distress or failure of12

large, interconnected bank holding companies or13

nonbank financial companies;14

(B) to promote market discipline, by elimi-15

nating expectations on the part of shareholders,16

creditors, and counterparties of such companies17

that the Government will shield them from18

losses in the event of failure; and19

(C) to respond to emerging threats to the20

stability of the United States financial markets.21

(2) DUTIES.The Council shall, in accordance22

with this title23

(A) collect information from member agen-24

cies and other Federal and State financial regu-25



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latory agencies and, if necessary to assess risks1

to the United States financial system, direct the2

Office of Financial Research to collect informa-3

tion from bank holding companies and nonbank4

financial companies;5

(B) provide direction to, and request data6

and analyses from, the Office of Financial Re-7

search to support the work of the Council;8

(C) monitor the financial services market-9

place in order to identify potential threats to10

the financial stability of the United States;11

(D) facilitate information sharing and co-12

ordination among the member agencies and13

other Federal and State agencies regarding do-14

mestic financial services policy development,15

rulemaking, examinations, reporting require-16

ments, and enforcement actions;17

(E) recommend to the member agencies18

general supervisory priorities and principles re-19

flecting the outcome of discussions among the20

member agencies;21

(F) identify gaps in regulation that could22

pose risks to the financial stability of the23

United States;24



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(G) require supervision by the Board of1

Governors for nonbank financial companies that2

may pose risks to the financial stability of the3

United States in the event of their material fi-4

nancial distress or failure, pursuant to section5

113;6

(H) make recommendations to the Board7

of Governors concerning the establishment of8

heightened prudential standards for risk-based9

capital, leverage, liquidity, contingent capital,10

resolution plans and credit exposure reports,11

concentration limits, enhanced public disclo-12

sures, and overall risk management for13

nonbank financial companies and large, inter-14

connected bank holding companies supervised15

by the Board of Governors;16

(I) identify systemically important finan-17

cial market utilities and payment, clearing, and18

settlement activities (as that term is defined in19

title VIII), and require such utilities and activi-20

ties to be subject to standards established by21

the Board of Governors;22

(J) make recommendations to primary fi-23

nancial regulatory agencies to apply new or24

heightened standards and safeguards for finan-25



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cial activities or practices that could create or1

increase risks of significant liquidity, credit, or2

other problems spreading among bank holding3

companies, nonbank financial companies, and4

United States financial markets;5

(K) make determinations regarding exemp-6

tions in title VII, where necessary;7

(L) provide a forum for8

(i) discussion and analysis of emerg-9

ing market developments and financial reg-10

ulatory issues; and11

(ii) resolution of jurisdictional dis-12

putes among the members of the Council;13

and14

(M) annually report to and testify before15

Congress on16

(i) the activities of the Council;17

(ii) significant financial market devel-18

opments and potential emerging threats to19

the financial stability of the United States;20

(iii) all determinations made under21

section 113 or title VIII, and the basis for22

such determinations; and23

(iv) recommendations24



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(I) to enhance the integrity, effi-1

ciency, competitiveness, and stability2

of United States financial markets;3

(II) to promote market discipline;4

and5

(III) to maintain investor con-6

fidence.7

(b) AUTHORITY TO OBTAIN INFORMATION.8

(1) IN GENERAL.The Council may receive,9

and may request the submission of, any data or in-10

formation from the Office of Financial Research and11

member agencies, as necessary12

(A) to monitor the financial services mar-13

ketplace to identify potential risks to the finan-14

cial stability of the United States; or15

(B) to otherwise carry out any of the pro-16

visions of this title.17

(2) SUBMISSIONS BY THE OFFICE AND MEMBER18

AGENCIES.Notwithstanding any other provision of19

law, the Office of Financial Research and any mem-20

ber agency are authorized to submit information to21

the Council.22

(3) FINANCIAL DATA COLLECTION.23

(A) IN GENERAL.The Council, acting24

through the Office of Financial Research, may25



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require the submission of periodic and other re-1

ports from any nonbank financial company or2

bank holding company for the purpose of as-3

sessing the extent to which a financial activity4

or financial market in which the nonbank finan-5

cial company or bank holding company partici-6

pates, or the nonbank financial company or7

bank holding company itself, poses a threat to8

the financial stability of the United States.9

(B) MITIGATION OF REPORT BURDEN.10

Before requiring the submission of reports from11

any nonbank financial company or bank holding12

company that is regulated by a member agency13

or any primary financial regulatory agency, the14

Council, acting through the Office of Financial15

Research, shall coordinate with such agencies16

and shall, whenever possible, rely on informa-17

tion available from the Office of Financial Re-18

search or such agencies.19

(4) BACK-UP EXAMINATION BY THE BOARD OF20

GOVERNORS.If the Council is unable to determine21

whether the financial activities of a nonbank finan-22

cial company pose a threat to the financial stability23

of the United States, based on information or re-24

ports obtained under paragraph (3), discussions with25



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management, and publicly available information, the1

Council may request the Board of Governors, and2

the Board of Governors is authorized, to conduct an3

examination of the nonbank financial company for4

the sole purpose of determining whether the5

nonbank financial company should be supervised by6

the Board of Governors for purposes of this title.7

(5) CONFIDENTIALITY.8

(A) IN GENERAL.The Council, the Office9

of Financial Research, and the other member10

agencies shall maintain the confidentiality of11

any data, information, and reports submitted12

under this subsection and subtitle B.13

(B) RETENTION OF PRIVILEGE.The sub-14

mission of any nonpublicly available data or in-15

formation under this subsection and subtitle B16

shall not constitute a waiver of, or otherwise af-17

fect, any privilege arising under Federal or18

State law (including the rules of any Federal or19

State court) to which the data or information is20

otherwise subject.21

(C) FREEDOM OF INFORMATION ACT.22

Section 552 of title 5, United States Code, in-23

cluding the exceptions thereunder, shall apply24



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to any data or information submitted under this1

subsection and subtitle B.2

SEC. 113. AUTHORITY TO REQUIRE SUPERVISION AND REG-3

ULATION OF CERTAIN NONBANK FINANCIAL4

COMPANIES.5

(a) U.S. NONBANK FINANCIAL COMPANIES SUPER-6

VISED BY THE BOARD OF GOVERNORS.7

(1) DETERMINATION.The Council, on a non-8

delegable basis and by a vote of not fewer than 239

of the members then serving, including an affirma-10

tive vote by the Chairperson, may determine that a11

U.S. nonbank financial company shall be supervised12

by the Board of Governors and shall be subject to13

prudential standards, in accordance with this title, if14

the Council determines that material financial dis-15

tress at the U.S. nonbank financial company would16

pose a threat to the financial stability of the United17

States.18

(2) CONSIDERATIONS.Each determination19

under paragraph (1) shall be based on a consider-20

ation by the Council of21

(A) the degree of leverage of the company;22

(B) the amount and nature of the financial23

assets of the company;24



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(C) the amount and types of the liabilities1

of the company, including the degree of reliance2

on short-term funding;3

(D) the extent and types of the off-bal-4

ance-sheet exposures of the company;5

(E) the extent and types of the trans-6

actions and relationships of the company with7

other significant nonbank financial companies8

and significant bank holding companies;9

(F) the importance of the company as a10

source of credit for households, businesses, and11

State and local governments and as a source of12

liquidity for the United States financial system;13

(G) the recommendation, if any, of a mem-14

ber of the Council;15

(H) the operation of, or ownership interest16

in, any clearing, settlement, or payment busi-17

ness of the company;18

(I) the extent to which19

(i) assets are managed rather than20

owned by the company; and21

(ii) ownership of assets under man-22

agement is diffuse; and23

(J) any other factors that the Council24

deems appropriate.25



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(b) FOREIGN NONBANK FINANCIAL COMPANIES SU-1

PERVISED BY THE BOARD OF GOVERNORS.2

(1) DETERMINATION.The Council, on a non-3

delegable basis and by a vote of not fewer than 234

of the members then serving, including an affirma-5

tive vote by the Chairperson, may determine that a6

foreign nonbank financial company that has sub-7

stantial assets or operations in the United States8

shall be supervised by the Board of Governors and9

shall be subject to prudential standards in accord-10

ance with this title, if the Council determines that11

material financial distress at the foreign nonbank fi-12

nancial company would pose a threat to the financial13

stability of the United States.14

(2) CONSIDERATIONS.Each determination15

under paragraph (1) shall be based on a consider-16

ation by the Council of17

(A) the degree of leverage of the company;18

(B) the amount and nature of the United19

States financial assets of the company;20

(C) the amount and types of the liabilities21

of the company used to fund activities and op-22

erations in the United States, including the de-23

gree of reliance on short-term funding;24



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S 3217 PCS

(D) the extent of the United States-related1

off-balance-sheet exposure of the company;2

(E) the extent and type of the transactions3

and relationships of the company with other4

significant nonbank financial companies and5

bank holding companies;6

(F) the importance of the company as a7

source of credit for United States households,8

businesses, and State and local governments,9

and as a source of liquidity for the United10

States financial system;11

(G) the recommendation, if any, of a mem-12

ber of the Council;13

(H) the extent to which14

(i) assets are managed rather than15

owned by the company; and16

(ii) ownership of assets under man-17

agement is diffuse; and18

(I) any other factors that the Council19

deems appropriate.20

(c) REEVALUATION AND RESCISSION.The Council21

shall22

(1) not less frequently than annually, reevaluate23

each determination made under subsections (a) and24



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(b) with respect to each nonbank financial company1

supervised by the Board of Governors; and2

(2) rescind any such determination, if the3

Council, by a vote of not fewer than 23 of the mem-4

bers then serving, including an affirmative vote by5

the Chairperson, determines that the nonbank finan-6

cial company no longer meets the standards under7

subsection (a) or (b), as applicable.8

(d) NOTICE AND OPPORTUNITY FOR HEARING AND9

FINAL DETERMINATION.10

(1) IN GENERAL.The Council shall provide to11

a nonbank financial company written notice of a12

proposed determination of the Council, including an13

explanation of the basis of the proposed determina-14

tion of the Council, that such nonbank financial15

company shall be supervised by the Board of Gov-16

ernors and shall be subject to prudential standards17

in accordance with this title.18

(2) HEARING.Not later than 30 days after19

the date of receipt of any notice of a proposed deter-20

mination under paragraph (1), the nonbank finan-21

cial company may request, in writing, an oppor-22

tunity for a written or oral hearing before the Coun-23

cil to contest the proposed determination. Upon re-24

ceipt of a timely request, the Council shall fix a time25



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S 3217 PCS

(not later than 30 days after the date of receipt of1

the request) and place at which such company may2

appear, personally or through counsel, to submit3

written materials (or, at the sole discretion of the4

Council, oral testimony and oral argument).5

(3) FINAL DETERMINATION.Not later than 606

days after the date of a hearing under paragraph7

(2), the Council shall notify the nonbank financial8

company of the final determination of the Council,9

which shall contain a statement of the basis for the10

decision of the Council.11

(4) NO HEARING REQUESTED.If a nonbank12

financial company does not make a timely request13

for a hearing, the Council shall notify the nonbank14

financial company, in writing, of the final determina-15

tion of the Council under subsection (a) or (b), as16

applicable, not later than 10 days after the date by17

which the company may request a hearing under18

paragraph (2).19

(e) EMERGENCY EXCEPTION.20

(1) IN GENERAL.The Council may waive or21

modify the requirements of subsection (d) with re-22

spect to a nonbank financial company, if the Council23

determines, by a vote of not fewer than 23 of the24

members then serving, including an affirmative vote25



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S 3217 PCS

by the Chairperson, that such waiver or modification1

is necessary or appropriate to prevent or mitigate2

threats posed by the nonbank financial company to3

the financial stability of the United States.4

(2) NOTICE.The Council shall provide notice5

of a waiver or modification under this paragraph to6

the nonbank financial company concerned as soon as7

practicable, but not later than 24 hours after the8

waiver or modification is granted.9

(3) OPPORTUNITY FOR HEARING.The Council10

shall allow a nonbank financial company to request,11

in writing, an opportunity for a written or oral hear-12

ing before the Council to contest a waiver or modi-13

fication under this paragraph, not later than 1014

days after the date of receipt of notice of the waiver15

or modification by the company. Upon receipt of a16

timely request, the Council shall fix a time (not later17

than 15 days after the date of receipt of the request)18

and place at which the nonbank financial company19

may appear, personally or through counsel, to sub-20

mit written materials (or, at the sole discretion of21

the Council, oral testimony and oral argument).22

(4) NOTICE OF FINAL DETERMINATION.Not23

later than 30 days after the date of any hearing24

under paragraph (3), the Council shall notify the25



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S 3217 PCS

subject nonbank financial company of the final de-1

termination of the Council under this paragraph,2

which shall contain a statement of the basis for the3


(f) CONSULTATION.The Council shall consult with5

the primary financial regulatory agency, if any, for each6

nonbank financial company or subsidiary of a nonbank fi-7

nancial company that is being considered for supervision8

by the Board of Governors under this section before the9

Council makes any final determination with respect to10

such nonbank financial company under subsection (a), (b),11

or (c).12

(g) JUDICIAL REVIEW.If the Council makes a final13

determination under this section with respect to a14

nonbank financial company, such nonbank financial com-15

pany may, not later than 30 days after the date of receipt16

of the notice of final determination under subsection17

(d)(3) or (e)(4), bring an action in the United States dis-18

trict court for the judicial district in which the home office19

of such nonbank financial company is located, or in the20

United States District Court for the District of Columbia,21

for an order requiring that the final determination be re-22

scinded, and the court shall, upon review, dismiss such ac-23

tion or direct the final determination to be rescinded. Re-24

view of such an action shall be limited to whether the final25



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determination made under this section was arbitrary and1

capricious.2

SEC. 114. REGISTRATION OF NONBANK FINANCIAL COMPA-3

NIES SUPERVISED BY THE BOARD OF GOV-4

ERNORS.5

Not later than 180 days after the date of a final6

Council determination under section 113 that a nonbank7

financial company is to be supervised by the Board of Gov-8

ernors, such company shall register with the Board of9

Governors, on forms prescribed by the Board of Gov-10

ernors, which shall include such information as the Board11

of Governors, in consultation with the Council, may deem12

necessary or appropriate to carry out this title.13

SEC. 115. ENHANCED SUPERVISION AND PRUDENTIAL14

STANDARDS FOR NONBANK FINANCIAL COM-15

PANIES SUPERVISED BY THE BOARD OF GOV-16

ERNORS AND CERTAIN BANK HOLDING COM-17

PANIES.18

(a) IN GENERAL.19

(1) PURPOSE.In order to prevent or mitigate20

risks to the financial stability of the United States21

that could arise from the material financial distress22

or failure of large, interconnected financial institu-23

tions, the Council may make recommendations to24

the Board of Governors concerning the establish-25



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S 3217 PCS

ment and refinement of prudential standards and re-1

porting and disclosure requirements applicable to2

nonbank financial companies supervised by the3

Board of Governors and large, interconnected bank4

holding companies, that5

(A) are more stringent than those applica-6

ble to other nonbank financial companies and7

bank holding companies that do not present8

similar risks to the financial stability of the9

United States; and10

(B) increase in stringency, based on the11

considerations identified in subsection (b)(3).12

(2) LIMITATION ON BANK HOLDING COMPA-13

NIES.Any standards recommended under sub-14

sections (b) through (f) shall not apply to any bank15

holding company with total consolidated assets of16

less than $50,000,000,000. The Council may rec-17

ommend an asset threshold greater than18

$50,000,000,000 for the applicability of any par-19

ticular standard under those subsections.20

(b) DEVELOPMENT OF PRUDENTIAL STANDARDS.21

(1) IN GENERAL.The recommendations of the22

Council under subsection (a) may include23

(A) risk-based capital requirements;24

(B) leverage limits;25



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S 3217 PCS

(C) liquidity requirements;1

(D) resolution plan and credit exposure re-2

port requirements;3

(E) concentration limits;4

(F) a contingent capital requirement;5

(G) enhanced public disclosures; and6

(H) overall risk management requirements.7

(2) PRUDENTIAL STANDARDS FOR FOREIGN FI-8

NANCIAL COMPANIES.In making recommendations9

concerning the standards set forth in paragraph (1)10

that would apply to foreign nonbank financial com-11

panies supervised by the Board of Governors or for-12

eign-based bank holding companies, the Council13

shall give due regard to the principle of national14

treatment and competitive equity.15

(3) CONSIDERATIONS.In making rec-16

ommendations concerning prudential standards17

under paragraph (1), the Council shall18

(A) take into account differences among19


Board of Governors and bank holding compa-21

nies described in subsection (a), based on22

(i) the factors described in subsections23

(a) and (b) of section 113;24



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S 3217 PCS

(ii) whether the company owns an in-1

sured depository institution;2

(iii) nonfinancial activities and affili-3

ations of the company; and4

(iv) any other factors that the Council5

determines appropriate; and6

(B) to the extent possible, ensure that7

small changes in the factors listed in sub-8

sections (a) and (b) of section 113 would not9

result in sharp, discontinuous changes in the10

prudential standards established under para-11

graph (1).12

(c) CONTINGENT CAPITAL.13

(1) STUDY REQUIRED.The Council shall con-14

duct a study of the feasibility, benefits, costs, and15

structure of a contingent capital requirement for16


Board of Governors and bank holding companies de-18

scribed in subsection (a), which study shall in-19

clude20

(A) an evaluation of the degree to which21

such requirement would enhance the safety and22

soundness of companies subject to the require-23

ment, promote the financial stability of the24



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S 3217 PCS

United States, and reduce risks to United1

States taxpayers;2

(B) an evaluation of the characteristics3

and amounts of convertible debt that should be4

required;5

(C) an analysis of potential prudential6

standards that should be used to determine7

whether the contingent capital of a company8

would be converted to equity in times of finan-9

cial stress;10

(D) an evaluation of the costs to compa-11

nies, the effects on the structure and operation12

of credit and other financial markets, and other13

economic effects of requiring contingent capital;14

(E) an evaluation of the effects of such re-15

quirement on the international competitiveness16

of companies subject to the requirement and17

the prospects for international coordination in18

establishing such requirement; and19

(F) recommendations for implementing20

regulations.21

(2) REPORT.The Council shall submit a re-22

port to Congress regarding the study required by23

paragraph (1) not later than 2 years after the date24

of enactment of this Act.25



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(3) RECOMMENDATIONS.1

(A) IN GENERAL.Subsequent to submit-2

ting a report to Congress under paragraph (2),3

the Council may make recommendations to the4

Board of Governors to require any nonbank fi-5

nancial company supervised by the Board of6

Governors and any bank holding company de-7

scribed in subsection (a) to maintain a min-8

imum amount of long-term hybrid debt that is9

convertible to equity in times of financial stress.10

(B) F ACTORS TO CONSIDER.In making11

recommendations under this subsection, the12

Council shall consider13

(i) an appropriate transition period14

for implementation of a conversion under15

this subsection;16

(ii) the factors described in subsection17

(b)(3);18

(iii) capital requirements applicable to19

a nonbank financial company supervised by20

the Board of Governors or a bank holding21

company described in subsection (a), and22

subsidiaries thereof;23

(iv) results of the study required by24

paragraph (1); and25



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(v) any other factor that the Council1

deems appropriate.2

(d) RESOLUTION PLAN AND CREDIT EXPOSURE RE-3

PORTS.4

(1) RESOLUTION PLAN.The Council may5

make recommendations to the Board of Governors6

concerning the requirement that each nonbank fi-7

nancial company supervised by the Board of Gov-8

ernors and each bank holding company described in9

subsection (a) report periodically to the Council, the10

Board of Governors, and the Corporation, the plan11

of such company for rapid and orderly resolution in12

the event of material financial distress or failure.13

(2) CREDIT EXPOSURE REPORT.The Council14

may make recommendations to the Board of Gov-15

ernors concerning the advisability of requiring each16

nonbank financial company supervised by the Board17

of Governors and bank holding company described in18

subsection (a) to report periodically to the Council,19

the Board of Governors, and the Corporation on20

(A) the nature and extent to which the21

company has credit exposure to other signifi-22

cant nonbank financial companies and signifi-23

cant bank holding companies; and24



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(B) the nature and extent to which other1

such significant nonbank financial companies2

and significant bank holding companies have3

credit exposure to that company.4

(e) CONCENTRATION LIMITS.In order to limit the5

risks that the failure of any individual company could pose6

to nonbank financial companies supervised by the Board7

of Governors or bank holding companies described in sub-8

section (a), the Council may make recommendations to the9

Board of Governors to prescribe standards to limit such10

risks, as set forth in section 165.11

(f) ENHANCED PUBLIC DISCLOSURES.The Council12

may make recommendations to the Board of Governors13

to require periodic public disclosures by bank holding com-14

panies described in subsection (a) and by nonbank finan-15

cial companies supervised by the Board of Governors, in16

order to support market evaluation of the risk profile, cap-17

ital adequacy, and risk management capabilities thereof.18

SEC. 116. REPORTS.19

(a) IN GENERAL.Subject to subsection (b), the20

Council, acting through the Office of Financial Research,21

may require a bank holding company with total consoli-22

dated assets of $50,000,000,000 or greater or a nonbank23

financial company supervised by the Board of Governors,24



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and any subsidiary thereof, to submit certified reports to1

keep the Council informed as to2

(1) the financial condition of the company;3

(2) systems for monitoring and controlling fi-4

nancial, operating, and other risks;5

(3) transactions with any subsidiary that is a6

depository institution; and7

(4) the extent to which the activities and oper-8

ations of the company and any subsidiary thereof,9

could, under adverse circumstances, have the poten-10

tial to disrupt financial markets or affect the overall11

financial stability of the United States.12

(b) USE OF EXISTING REPORTS.13

(1) IN GENERAL.For purposes of compliance14

with subsection (a), the Council, acting through the15

Office of Financial Research, shall, to the fullest ex-16

tent possible, use17

(A) reports that a bank holding company,18

nonbank financial company supervised by the19

Board of Governors, or any functionally regu-20

lated subsidiary of such company has been re-21

quired to provide to other Federal or State reg-22

ulatory agencies;23

(B) information that is otherwise required24

to be reported publicly; and25



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(C) externally audited financial statements.1

(2) AVAILABILITY.Each bank holding com-2

pany described in subsection (a) and nonbank finan-3

cial company supervised by the Board of Governors,4

and any subsidiary thereof, shall provide to the5

Council, at the request of the Council, copies of all6

reports referred to in paragraph (1).7

(3) CONFIDENTIALITY.The Council shall8

maintain the confidentiality of the reports obtained9

under subsection (a) and paragraph (1)(A) of this10

subsection.11

SEC. 117. TREATMENT OF CERTAIN COMPANIES THAT12

CEASE TO BE BANK HOLDING COMPANIES.13

(a) APPLICABILITY.This section shall apply to any14

entity or a successor entity that15

(1) was a bank holding company having total16

consolidated assets equal to or greater than17

$50,000,000,000 as of January 1, 2010; and18

(2) received financial assistance under or par-19

ticipated in the Capital Purchase Program estab-20

lished under the Troubled Asset Relief Program au-21

thorized by the Emergency Economic Stabilization22

Act of 2008.23

(b) TREATMENT.If an entity described in sub-24

section (a) ceases to be a bank holding company at any25



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time after January 1, 2010, then such entity shall be1

treated as a nonbank financial company supervised by the2

Board of Governors, as if the Council had made a deter-3

mination under section 113 with respect to that entity.4

(c) APPEAL.5

(1) REQUEST FOR HEARING.An entity may6

request, in writing, an opportunity for a written or7

oral hearing before the Council to appeal its treat-8

ment as a nonbank financial company supervised by9

the Board of Governors in accordance with this sec-10

tion. Upon receipt of the request, the Council shall11

fix a time (not later than 30 days after the date of12

receipt of the request) and place at which such enti-13

ty may appear, personally or through counsel, to14

submit written materials (or, at the sole discretion15

of the Council, oral testimony and oral argument).16

(2) DECISION.17

(A) PROPOSED DECISION.Not later than18

60 days after the date of a hearing under para-19

graph (1), the Council shall submit a report to,20

and may testify before, the Committee on21

Banking, Housing, and Urban Affairs of the22

Senate and the Committee on Financial Serv-23

ices of the House of Representatives on the pro-24

posed decision of the Council regarding an ap-25



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peal under paragraph (1), which report shall in-1

clude a statement of the basis for the proposed2


(B) NOTICE OF FINAL DECISION.The4

Council shall notify the subject entity of the5

final decision of the Council regarding an ap-6

peal under paragraph (1), which notice shall7

contain a statement of the basis for the final8

decision of the Council, not later than 60 days9

after the later of10

(i) the date of the submission of the11

report under subparagraph (A); or12

(ii) if the Committee on Banking,13

Housing, and Urban Affairs of the Senate14

or the Committee on Financial Services of15

the House of Representatives holds one or16

more hearings regarding such report, the17

date of the last such hearing.18

(C) CONSIDERATIONS.In making a deci-19

sion regarding an appeal under paragraph (1),20

the Council shall consider whether the company21

meets the standards under section 113(a) or22

113(b), as applicable, and the definition of the23

term nonbank financial company under sec-24

tion 102. The decision of the Council shall be25



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final, subject to the review under paragraph1

(3).2

(3) REVIEW.If the Council denies an appeal3

under this subsection, the Council shall, not less fre-4

quently than annually, review and reevaluate the de-5

cision.6

SEC. 118. COUNCIL FUNDING.7

Any expenses of the Council shall be treated as ex-8

penses of, and paid by, the Office of Financial Research.9

SEC. 119. RESOLUTION OF SUPERVISORY JURISDICTIONAL10

DISPUTES AMONG MEMBER AGENCIES.11

(a) REQUEST FOR DISPUTE RESOLUTION.The12

Council shall resolve a dispute among 2 or more member13

agencies, if14

(1) a member agency has a dispute with an-15

other member agency about the respective jurisdic-16

tion over a particular bank holding company,17

nonbank financial company, or financial activity or18

product (excluding matters for which another dis-19

pute mechanism specifically has been provided under20

Federal law);21

(2) the Council determines that the disputing22

agencies cannot, after a demonstrated good faith ef-23

fort, resolve the dispute without the intervention of24

the Council; and25



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(3) any of the member agencies involved in the1

dispute2

(A) provides all other disputants prior no-3

tice of the intent to request dispute resolution4

by the Council; and5

(B) requests in writing, not earlier than 146

days after providing the notice described in sub-7

paragraph (A), that the Council resolve the dis-8

pute.9

(b) COUNCIL DECISION.The Council shall resolve10

each dispute described in subsection (a)11

(1) within a reasonable time after receiving the12

dispute resolution request;13

(2) after consideration of relevant information14

provided by each agency party to the dispute; and15

(3) by agreeing with 1 of the disputants regard-16

ing the entirety of the matter, or by determining a17

compromise position.18

(c) FORM AND BINDING EFFECT.A Council deci-19

sion under this section shall20

(1) be in writing;21

(2) include an explanation of the reasons there-22

for; and23

(3) be binding on all Federal agencies that are24

parties to the dispute.25



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SEC. 120. ADDITIONAL STANDARDS APPLICABLE TO ACTIVI-1

TIES OR PRACTICES FOR FINANCIAL STA-2

BILITY PURPOSES.3

(a) IN GENERAL.The Council may issue rec-4

ommendations to the primary financial regulatory agen-5

cies to apply new or heightened standards and safeguards,6

including standards enumerated in section 115, for a fi-7

nancial activity or practice conducted by bank holding8

companies or nonbank financial companies under their re-9

spective jurisdictions, if the Council determines that the10

conduct of such activity or practice could create or in-11

crease the risk of significant liquidity, credit, or other12

problems spreading among bank holding companies and13

nonbank financial companies or the financial markets of14

the United States.15

(b) PROCEDURE FOR RECOMMENDATIONS TO REGU-16

LATORS.17

(1) NOTICE AND OPPORTUNITY FOR COM-18

MENT.The Council shall consult with the primary19

financial regulatory agencies and provide notice to20

the public and opportunity for comment for any pro-21

posed recommendation that the primary financial22

regulatory agencies apply new or heightened stand-23

ards and safeguards for a financial activity or prac-24

tice.25



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(2) CRITERIA.The new or heightened stand-1

ards and safeguards for a financial activity or prac-2

tice recommended under paragraph (1)3

(A) shall take costs to long-term economic4

growth into account; and5

(B) may include prescribing the conduct of6

the activity or practice in specific ways (such as7

by limiting its scope, or applying particular cap-8

ital or risk management requirements to the9

conduct of the activity) or prohibiting the activ-10

ity or practice.11

(c) IMPLEMENTATION OF RECOMMENDED STAND-12

ARDS.13

(1) ROLE OF PRIMARY FINANCIAL REGULATORY14

AGENCY.15

(A) IN GENERAL.Each primary financial16

regulatory agency may impose, require reports17

regarding, examine for compliance with, and en-18

force standards in accordance with this section19

with respect to those entities for which it is the20

primary financial regulatory agency.21

(B) RULE OF CONSTRUCTION.The au-22

thority under this paragraph is in addition to,23

and does not limit, any other authority of a pri-24

mary financial regulatory agency. Compliance25



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by an entity with actions taken by a primary fi-1

nancial regulatory agency under this section2

shall be enforceable in accordance with the stat-3

utes governing the respective jurisdiction of the4

primary financial regulatory agency over the en-5

tity, as if the agency action were taken under6

those statutes.7

(2) IMPOSITION OF STANDARDS.The primary8

senate financial reform s3217

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