financial regulatory reform bill 2010

8/9/2019 Financial Regulatory Reform Bill 2010

1/1611

II

May 27 (legislative day, May 26), 2010

Ordered to be printed as passed

In the Senate of the United States,May 20, 2010.

Resolved, That the bill from the House of Representa-

tives (H.R. 4173) entitled An Act to provide for financial

regulatory reform, to protect consumers and investors, to en-

hance Federal understanding of insurance issues, to regulate

the over-the-counter derivatives markets, and for other pur-

poses., do pass with the following

AMENDMENTS:

Strike all after the enacting clause and insert the

following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.1

(a) SHORT TITLE.This Act may be cited as the Re-2

storing 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.


2/1611

2

HR 4173 PP

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.

Sec. 162. Enforcement.

Sec. 163. Acquisitions.

Sec. 164. Prohibition against management interlocks between certain financial

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

companies supervised by the Board of Governors and certain

bank holding companies.

Sec. 166. Early remediation requirements.

Sec. 167. Affiliations.

Sec. 168. Regulations.

Sec. 169. Avoiding duplication.

Sec. 170. Safe harbor.

Sec. 171. Leverage and risk-based capital requirements.


3/1611

3

HR 4173 PP

TITLE IIORDERLY LIQUIDATION AUTHORITY


Sec. 202. Judicial review.

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.

Sec. 212. Prohibition of circumvention and prevention of conflicts of interest.

Sec. 213. Ban on senior executives and directors.

Sec. 214. Prohibition on taxpayer funding.

TITLE IIITRANSFER OF POWERS TO THE COMPTROLLER OF THE

CURRENCY, THE CORPORATION, AND THE BOARD OF GOVERNORS


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 of the Office of Thrift Su-

pervision.

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

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.


4/1611

4

HR 4173 PP

TITLE IVREGULATION OF ADVISERS TO HEDGE FUNDS AND

OTHERS



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

private advisers; limited intrastate exemption.Sec. 404. Collection of systemic risk data; reports; examinations; disclosures.

Sec. 405. Disclosure provision 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 registra-

tion of investment advisers.

Sec. 411. Custody of client assets.

Sec. 412. Adjusting the accredited investor standard.

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

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

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

Sec. 416. Transition period.

TITLE 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.


PART IIIRULE OF CONSTRUCTION

Sec. 541. Rule of construction.


5/1611

5

HR 4173 PP

Sec. 542. Severability.

TITLE VIIMPROVEMENTS TO REGULATION OF BANK AND SAVINGS

ASSOCIATION HOLDING COMPANIES AND DEPOSITORY INSTITU-

TIONS

Sec. 601. Short title.Sec. 602. Definition.

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

loan companies, and certain other companies under the Bank

Holding Company Act of 1956.

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

ally regulated subsidiaries.

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

stitution 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 transactions,

repurchase agreements, reverse repurchase agreements, and secu-

rities 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 com-

panies.

Sec. 620. Concentration limits on large financial firms.

TITLE VIIWALL STREET TRANSPARENCY AND ACCOUNTABILITY


Subtitle ARegulation of Over-the-Counter Swaps Markets

PART IREGULATORYAUTHORITY


Sec. 712. Review of regulatory authority.

Sec. 713. Recommendations for changes to portfolio margining laws.

Sec. 714. Abusive swaps.

Sec. 715. Authority to prohibit participation in swap activities.

Sec. 716. Prohibition against Federal Government bailouts of swaps entities.

Sec. 717. New product approvalCFTC-SEC process.

Sec. 718. Determining status of novel derivative products.

PART IIR EGULATION OF SWAP MARKETS


Sec. 722. Jurisdiction.

Sec. 723. Clearing.


6/1611

6

HR 4173 PP

Sec. 724. Swaps; segregation and bankruptcy treatment.

Sec. 725. Derivatives clearing organizations.

Sec. 726. Rulemaking on conflict of interest.

Sec. 727. Public reporting of swap transaction data.

Sec. 728. Swap data repositories.

Sec. 729. Reporting and recordkeeping.

Sec. 730. Large swap trader reporting.

Sec. 731. Registration and regulation of swap dealers and major swap partici-

pants.

Sec. 732. Conflicts of interest.

Sec. 733. Swap execution facilities.

Sec. 734. Derivatives transaction execution facilities and exempt boards of trade.

Sec. 735. Designated contract markets.

Sec. 736. Margin.

Sec. 737. Position limits.

Sec. 738. Foreign boards of trade.

Sec. 739. Legal certainty for swaps.

Sec. 740. Multilateral clearing organizations.

Sec. 741. Enforcement.Sec. 742. Retail commodity transactions.

Sec. 743. Other authority.

Sec. 744. Restitution remedies.

Sec. 745. Enhanced compliance by registered entities.

Sec. 746. Insider trading.

Sec. 747. Antidisruptive practices authority.

Sec. 748. Commodity whistleblower incentives and protection.

Sec. 749. Conforming amendments.

Sec. 750. Study on oversight of carbon markets.

Sec. 751. Energy and Environmental Markets Advisory Committee.

Sec. 752. International harmonization.

Sec. 753. Antimarket manipulation authority.


Subtitle BRegulation of Security-Based Swap Markets

Sec. 761. Definitions under the Securities Exchange Act of 1934.

Sec. 762. Repeal of prohibition on regulation of security-based swap agreements.

Sec. 763. Amendments to the Securities Exchange Act of 1934.

Sec. 764. Registration and regulation of security-based swap dealers and major

security-based swap participants.

Sec. 765. Rulemaking on conflict of interest.

Sec. 766. Reporting and recordkeeping.

Sec. 767. State gaming and bucket shop laws.

Sec. 768. Amendments to the Securities Act of 1933; treatment of security-based

swaps.Sec. 769. Definitions under the Investment Company Act of 1940.

Sec. 770. Definitions under the Investment Advisors Act of 1940.


Sec. 772. Jurisdiction.


TITLE VIIIPAYMENT, CLEARING, AND SETTLEMENT SUPERVISION


Sec. 802. Findings and purposes.



7/1611

7

HR 4173 PP

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.



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 test-ing.

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

vestment 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 be-

fore 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. Disqualifying felons and other bad actors from Regulation D Offer-

ings.

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 trad-

ed 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.


8/1611

8

HR 4173 PP

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 rat-

ing decisions.

Sec. 936. Qualification standards for credit rating analysts.

Sec. 937. Timing of regulations.

Sec. 938. Universal ratings symbols.

Sec. 939. Removal of statutory references to credit ratings.

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

rating agency independence.

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

els.

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

pendent professional analyst organization.

Sec. 939D. Initial credit rating assignments.

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 institutions.

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 inves-

tors.


9/1611

9

HR 4173 PP

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

markets.

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.

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 re-

views.

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

National Credit Union Share Insurance Fund for purposes ofInspector General reviews.

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

Sec. 989A. Senior investor protections.

Sec. 989B. Designated Federal Entity Inspectors General Independence.

Sec. 989C. Strengthening Inspector General accountability.

Sec. 989D. Removal of inspectors general of designated Federal entities.

Sec. 989E. Additional oversight of financial regulatory system.

Subtitle JSelf-funding of the Securities and Exchange Commission

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

TITLE XBUREAU OF CONSUMER FINANCIAL PROTECTION



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.


10/1611

10

HR 4173 PP

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

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.


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 subsidiariesclarified.

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. Small business data collection.

Sec. 1072. GAO study on the effectiveness and impact of various appraisal meth-

ods.

Sec. 1073. Prohibited payments to mortgage originators.

Sec. 1074. Minimum standards for residential mortgage loans.

Sec. 1075. Prohibition on certain prepayment penalties.


11/1611

11

HR 4173 PP

Sec. 1076. Assistance for economically vulnerable individuals and families.

Sec. 1077. Remittance transfers.

Sec. 1078. Department of the Treasury study on ending the conservatorship of

Fannie Mae, Freddie Mac, and reforming the housing finance

system.

Sec. 1079. Reasonable fees and rules for payment card transactions.

Sec. 1079A. Use of Consumer Reports.

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 Accu-

rate Credit Transactions Act.Sec. 1089. Amendments to the Fair Debt Collection Practices Act.

Sec. 1090. Amendments to the Federal Deposit Insurance Act.

Sec. 1091. Amendments to the Gramm-Leach-Bliley Act.

Sec. 1092. Amendments to the Home Mortgage Disclosure Act.

Sec. 1093. Amendments to the Homeowners Protection Act of 1998.

Sec. 1094. Amendments to the Home Ownership and Equity Protection Act of

1994.

Sec. 1095. Amendments to the Omnibus Appropriations Act, 2009.

Sec. 1096. Amendments to the Real Estate Settlement Procedures Act.

Sec. 1097. Amendments to the Right to Financial Privacy Act of 1978.

Sec. 1098. Amendments to the Secure and Fair Enforcement for Mortgage Licens-

ing Act of 2008.

Sec. 1099. Amendments to the Truth in Lending Act.

Sec. 1100. Amendments to the Truth in Savings Act.

Sec. 1101. Amendments to the Telemarketing and Consumer Fraud and Abuse

Prevention Act.

Sec. 1102. Amendments to the Paperwork Reduction Act.

Sec. 1103. Adjustments for inflation in the Truth in Lending Act.

Sec. 1104. Small business fairness and regulatory transparency.


TITLE XIFEDERAL RESERVE SYSTEM PROVISIONS

Sec. 1151. Federal Reserve Act amendments on emergency lending authority.

Sec. 1152. Reviews of special Federal Reserve credit facilities.

Sec. 1153. Public access to information.Sec. 1154. Liquidity event determination.

Sec. 1155. Emergency financial stabilization.

Sec. 1156. Additional related amendments.

Sec. 1157. Federal Reserve Act amendments on Federal reserve bank governance.

Sec. 1158. Amendments to the Federal Reserve Act relating to supervision and

regulation policy.

Sec. 1159. GAO audit of the Federal Reserve facilities; Publication of Board ac-

tions.


12/1611

12

HR 4173 PP

TITLE XIIIMPROVING ACCESS TO MAINSTREAM FINANCIAL

INSTITUTIONS


Sec. 1202. Purpose.


Sec. 1204. Expanded access to mainstream financial institutions.Sec. 1205. Low-cost alternatives to payday loans.

Sec. 1206. Grants to establish loan-loss reserve funds.

Sec. 1207. Procedural provisions.

Sec. 1208. Authorization of appropriations.

Sec. 1209. Regulations.

Sec. 1210. Evaluation and reports to Congress.

TITLE XIIIPAY IT BACK ACT


Sec. 1302. Amendment to reduce TARP authorization.

Sec. 1303. Report.

Sec. 1304. Amendments to Housing and Economic Recovery Act of 2008.Sec. 1305. Federal Housing Finance Agency report.

Sec. 1306. Repayment of unobligated ARRA funds.

TITLE XIVMISCELLANEOUS

Sec. 1401. Restrictions on use of Federal funds to finance bailouts of foreign gov-

ernments.

TITLE XVCONGO CONFLICT MINERALS

Sec. 1501. Sense of Congress on exploitation and trade of columbite-tantalite, cas-

siterite, gold, and wolframite originating in Democratic Repub-

lic of Congo.

Sec. 1502. Disclosure to Securities and Exchange Commission relating to colum-bite-tantalite, cassiterite, gold, and wolframite originating in

Democratic Republic of Congo.

Sec. 1503. Report.

SEC. 2. DEFINITIONS.1

As used in this Act, the following definitions shall2

apply, except as the context otherwise requires or as other-3

wise specifically provided in this Act:4

(1) AFFILIATE.The term affiliate means any5

company that controls, is controlled by, or is under6

common control with another company.7

(2) A PPROPRIATE FEDERAL BANKING AGENCY.8

On and after the transfer date, the term appropriate9


13/1611

13

HR 4173 PP

Federal banking agency has the same meaning as in1

section 3(q) of the Federal Deposit Insurance Act (122

U.S.C. 1813(q)), as amended by title III.3

(3) BOARD OF GOVERNORS.The term Board of4

Governors means the Board of Governors of the Fed-5

eral Reserve System.6

(4) BUREAU.The term Bureau means the7

Bureau of Consumer Financial Protection established8

under title X.9

(5) COMMISSION.The term Commission10

means the Securities and Exchange Commission, ex-11

cept in the context of the Commodity Futures Trading12

Commission.13

(6) CORPORATION.The term Corporation14

means the Federal Deposit Insurance Corporation.15

(7) COUNCIL.The term Council means the16

Financial Stability Oversight Council established17

under title I.18

(8) C REDIT UNION.The term credit union19

means a Federal credit union, State credit union, or20

State-chartered credit union, as those terms are de-21

fined in section 101 of the Federal Credit Union Act22

(12 U.S.C. 1752).23

(9) F EDERAL BANKING AGENCY.The term24


14/1611

14

HR 4173 PP

(A) Federal banking agency means, indi-1

vidually, the Board of Governors, the Office of2

the Comptroller of the Currency, and the Cor-3

poration; and4

(B) Federal banking agencies means all5

of the agencies referred to in subparagraph (A),6

collectively.7

(10) FUNCTIONALLY REGULATED SUBSIDIARY.8

The term functionally regulated subsidiary has the9

same meaning as in section 5(c)(5) of the Bank Hold-10

ing Company Act of 1956 (12 U.S.C. 1844(c)(5)).11

(11) P RIMARY FINANCIAL REGULATORY AGEN-12

CY.The term primary financial regulatory agen-13

cy means14

(A) the appropriate Federal banking agen-15

cy, with respect to institutions described in sec-16

tion 3(q) of the Federal Deposit Insurance Act,17

except to the extent that an institution is or the18

activities of an institution are otherwise subject19

to the jurisdiction of an agency listed in sub-20

paragraph (B), (C), (D), or (E);21

(B) the Securities and Exchange Commis-22

sion, with respect to23


15/1611

15

HR 4173 PP

(i) any broker or dealer that is reg-1

istered with the Commission under the Se-2

curities Exchange Act of 1934;3

(ii) any investment company that is4

registered with the Commission under the5

Investment Company Act of 1940;6

(iii) any investment adviser that is7

registered with the Commission under the8

Investment Advisers Act of 1940, with re-9

spect to the investment advisory activities of10

such company and activities that are inci-11

dental to such advisory activities; and12

(iv) any clearing agency registered13

with the Commission under the Securities14

Exchange Act of 1934;15

(C) the Commodity Futures Trading Com-16

mission, with respect to any futures commission17

merchant, any commodity trading adviser, and18

any commodity pool operator registered with the19

Commodity Futures Trading Commission under20

the Commodity Exchange Act, with respect to the21

commodities activities of such entity and activi-22

ties that are incidental to such commodities ac-23

tivities;24


16/1611

16

HR 4173 PP

(D) the State insurance authority of the1

State in which an insurance company is domi-2

ciled, with respect to the insurance activities and3

activities that are incidental to such insurance4

activities of an insurance company that is sub-5

ject to supervision by the State insurance au-6

thority under State insurance law; and7

(E) the Federal Housing Finance Agency,8

with respect to Federal Home Loan Banks or the9

Federal Home Loan Bank System, and with re-10

spect to the Federal National Mortgage Associa-11

tion or the Federal Home Loan Mortgage Cor-12

poration.13

(12) P RUDENTIAL STANDARDS.The term pru-14

dential standards means enhanced supervision and15

regulatory standards developed by the Board of Gov-16

ernors under section 115 or 165.17

(13) SECRETARY.The term Secretary means18

the Secretary of the Treasury.19

(14) S ECURITIES TERMS.The20

(A) terms broker, dealer, issuer, na-21

tionally recognized statistical ratings organiza-22

tion, security, and securities laws have the23

same meanings as in section 3 of the Securities24

Exchange Act of 1934 (15 U.S.C. 78c);25


17/1611

17

HR 4173 PP

(B) term investment adviser has the same1

meaning as in section 202 of the Investment Ad-2

visers Act of 1940 (15 U.S.C. 80b2); and3

(C) term investment company has the4

same meaning as in section 3 of the Investment5

Company Act of 1940 (15 U.S.C. 80a3).6

(15) STATE.The term State means any7

State, commonwealth, territory, or possession of the8

United States, the District of Columbia, the Common-9

wealth of Puerto Rico, the Commonwealth of the10

Northern Mariana Islands, American Samoa, Guam,11

or the United States Virgin Islands.12

(16) T RANSFER DATE.The term transfer13

date means the date established under section 311.14

(17) OTHER INCORPORATED DEFINITIONS

.15

(A) F EDERAL DEPOSIT INSURANCE ACT.16

The terms affiliate, bank, bank holding17

company, control (when used with respect to18

a depository institution), deposit, depository19

institution, Federal depository institution,20

Federal savings association, foreign bank,21

including, insured branch, insured deposi-22

tory institution, national member bank, na-23

tional nonmember bank, savings association,24

State bank, State depository institution,25


18/1611

18

HR 4173 PP

State member bank, State nonmember bank,1

State savings association, and subsidiary2

have the same meanings as in section 3 of the3

Federal Deposit Insurance Act (12 U.S.C. 1813).4

(B) HOLDING COMPANIES.The term5

(i) bank holding company has the6

same meaning as in section 2 of the Bank7

Holding Company Act of 1956 (12 U.S.C.8

1841);9

(ii) financial holding company has10

the same meaning as in section 2(p) of the11

Bank Holding Company Act of 1956 (1212

U.S.C. 1841(p)); and13

(iii) savings and loan holding com-14

pany has the same meaning as in section15

10 of the Home Owners Loan Act (1216

U.S.C. 1467a(a)).17

SEC. 3. SEVERABILITY.18

If any provision of this Act, an amendment made by19

this Act, or the application of such provision or amendment20

to any person or circumstance is held to be unconstitu-21

tional, the remainder of this Act, the amendments made by22

this Act, and the application of the provisions of such to23

any person or circumstance shall not be affected thereby.24


19/1611

19

HR 4173 PP

SEC. 4. EFFECTIVE DATE.1

Except as otherwise specifically provided in this Act2

or the amendments made by this Act, this Act and such3

amendments shall take effect 1 day after the date of enact-4

ment of this Act.5

TITLE IFINANCIAL STABILITY6

SEC. 101. SHORT TITLE.7

This title may be cited as the Financial Stability Act8

of 2010.9

SEC. 102. DEFINITIONS.10

(a) IN GENERAL.For purposes of this title, unless the11

context otherwise requires, the following definitions shall12

apply:13

(1) B ANK HOLDING COMPANY.The term bank14

holding company has the same meaning as in sec-15

tion 2 of the Bank Holding Company Act of 1956 (1216

U.S.C. 1841). A foreign bank or company that is17

treated as a bank holding company for purposes of18

the Bank Holding Company Act of 1956, pursuant to19

section 8(a) of the International Banking Act of 197820

(12 U.S.C. 3106(a)), shall be treated as a bank hold-21

ing company for purposes of this title.22

(2) CHAIRPERSON.The term Chairperson23

means the Chairperson of the Council.24


20/1611

20

HR 4173 PP

(3) M EMBER AGENCY.The term member agen-1

cy means an agency represented by a voting member2

of the Council.3

(4) NONBANK FINANCIAL COMPANY DEFINI-4

TIONS.5

(A) FOREIGN NONBANK FINANCIAL COM-6

PANY.The term foreign nonbank financial7

company means a company (other than a com-8

pany that is, or is treated in the United States9

as, a bank holding company or a subsidiary10

thereof) that is11

(i) incorporated or organized in a12

country other than the United States; and13

(ii) predominantly engaged in, includ-14

ing through a branch in the United States,15

financial activities, as defined in paragraph16

(6).17

(B) U.S. NONBANK FINANCIAL COMPANY.18

The term U.S. nonbank financial company19

means a company (other than a bank holding20

company or a subsidiary thereof, or a Farm21

Credit System institution chartered and subject22

to the provisions of the Farm Credit Act of 197123

(12 U.S.C. 2001 et seq.)) that is24


21/1611

21

HR 4173 PP

(i) incorporated or organized under the1

laws of the United States or any State; and2

(ii) predominantly engaged in finan-3

cial activities as defined in paragraph (6).4

(C) NONBANK FINANCIAL COMPANY.The5

term nonbank financial company means a6

U.S. nonbank financial company and a foreign7

nonbank financial company.8

(D) NONBANK FINANCIAL COMPANY SUPER-9

VISED BY THE BOARD OF GOVERNORS.The10

term nonbank financial company supervised by11

the Board of Governors means a nonbank fi-12

nancial company that the Council has deter-13

mined under section 113 shall be supervised by14

the Board of Governors.15

(5) O FFICE OF FINANCIAL RESEARCH.The term16

Office of Financial Research means the office estab-17

lished under section 152.18

(6) P REDOMINANTLY ENGAGED.A company is19

predominantly engaged in financial activities if20

(A) the annual gross revenues derived by the21

company and all of its subsidiaries from activi-22

ties that are financial in nature (as defined in23

section 4(k) of the Bank Holding Company Act24

of 1956) and, if applicable, from the ownership25


22/1611

22

HR 4173 PP

or control of one or more insured depository in-1

stitutions, represents 85 percent or more of the2

consolidated annual gross revenues of the com-3

pany; or4

(B) the consolidated assets of the company5

and all of its subsidiaries related to activities6

that are financial in nature (as defined in sec-7

tion 4(k) of the Bank Holding Company Act of8

1956) and, if applicable, related to the ownership9

or control of one or more insured depository in-10

stitutions, represents 85 percent or more of the11

consolidated assets of the company.12

(7) S IGNIFICANT INSTITUTIONS.The terms sig-13

nificant nonbank financial company and signifi-14

cant bank holding company have the meanings given15

those terms by rule of the Board of Governors.16

(b) DEFINITIONAL CRITERIA.The Board of Gov-17

ernors shall establish, by regulation, the requirements for18

determining if a company is predominantly engaged in fi-19

nancial activities, as defined in subsection (a)(6).20

(c) FOREIGN NONBANKFINANCIAL COMPANIES.For21

purposes of the authority of the Board of Governors under22

this title with respect to foreign nonbank financial compa-23

nies, references in this title to company or subsidiary24


23/1611

23

HR 4173 PP

include only the United States activities and subsidiaries1

of such foreign company.2

Subtitle AFinancial Stability3

Oversight Council4

SEC. 111. FINANCIAL STABILITY OVERSIGHT COUNCIL ES-5

TABLISHED.6

(a) ESTABLISHMENT.Effective on the date of enact-7

ment of this Act, there is established the Financial Stability8

Oversight Council.9

(b) MEMBERSHIP.The Council shall consist of the10

following members:11

(1) VOTING MEMBERS.The voting members,12

who shall each have 1 vote on the Council shall be13

(A) the Secretary of the Treasury, who shall14

serve as Chairperson of the Council;15

(B) the Chairman of the Board of Gov-16

ernors;17

(C) the Comptroller of the Currency;18

(D) the Director of the Bureau;19

(E) the Chairman of the Commission;20

(F) the Chairperson of the Corporation;21

(G) the Chairperson of the Commodity Fu-22

tures Trading Commission;23

(H) the Director of the Federal Housing Fi-24

nance Agency; and25


24/1611

24

HR 4173 PP

(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 of the4

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 Council shall14

be filled in the manner in which the original appoint-15

ment was made.16

(3) ACTING OFFICIALS MAY SERVE.In the event17

of a vacancy in the office of the head of a member18

agency or department, and pending the appointment19

of a successor, or during the absence or disability of20

the head of a member agency or department, the act-21

ing head of the member agency or department shall22

serve as a member of the Council in the place of that23

agency or department head.24


25/1611

25

HR 4173 PP

(d) T ECHNICAL ANDPROFESSIONAL ADVISORY COM-1

MITTEES.The Council may appoint such special advisory,2

technical, or professional committees as may be useful in3

carrying out the functions of the Council, including an ad-4

visory committee consisting of State regulators, and the5

members of such committees may be members of the Council,6

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 members then10

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, procedure,15

or practice for purposes of section 553 of title 5,16

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 OFFACA.The Federal Advi-21

sory Committee Act (5 U.S.C. App.) shall not apply to the22

Council, or to any special advisory, technical, or profes-23

sional committee appointed by the Council, except that, if24

an advisory, technical, or professional committee has one25


26/1611

26

HR 4173 PP

or more members who are not employees of or affiliated with1

the United States Government, the Council shall publish a2

list of the names of the members of such committee.3

(h) ASSISTANCEFROMFEDERALAGENCIES.Any de-4

partment or agency of the United States may provide to5

the Council and any special advisory, technical, or profes-6

sional committee appointed by the Council, such services,7

funds, facilities, staff, and other support services as the8

Council may determine advisable.9

(i) COMPENSATION OFMEMBERS.10

(1) F EDERAL EMPLOYEE MEMBERS.All mem-11

bers of the Council who are officers or employees of12

the United States shall serve without compensation in13

addition to that received for their services as officers14

or employees of the United States.15

(2) COMPENSATION FOR NON- FEDERAL MEM-16

BER.Section 5314 of title 5, United States Code, is17

amended by adding at the end the following:18

Independent Member of the Financial Stability19

Oversight Council (1)..20

(j) D ETAIL OF GOVERNMENTEMPLOYEES.Any em-21

ployee of the Federal Government may be detailed to the22

Council without reimbursement, and such detail shall be23

without interruption or loss of civil service status or privi-24

lege. An employee of the Federal Government detailed to the25


27/1611

27

HR 4173 PP

Council shall report to and be subject to oversight by the1

Council during the assignment to the Council, and shall2

be compensated by the department or agency from which3

the employee was detailed.4

SEC. 112. COUNCIL AUTHORITY.5

(a) PURPOSES ANDDUTIES OF THE COUNCIL.6

(1) I N GENERAL.The purposes of the Council7

are8

(A) to identify risks to the financial sta-9

bility of the United States that could arise from10

the material financial distress or failure of large,11

interconnected bank holding companies or12

nonbank financial companies;13

(B) to promote market discipline, by elimi-14

nating expectations on the part of shareholders,15

creditors, and counterparties of such companies16

that the Government will shield them from losses17

in the event of failure; and18

(C) to respond to emerging threats to the19

stability of the United States financial markets.20

(2) DUTIES.The Council shall, in accordance21

with this title22

(A) collect information from member agen-23

cies and other Federal and State financial regu-24

latory agencies and, if necessary to assess risks25


28/1611

28

HR 4173 PP

to the United States financial system, direct the1

Office of Financial Research to collect informa-2

tion from bank holding companies and nonbank3

financial companies;4

(B) provide direction to, and request data5

and analyses from, the Office of Financial Re-6

search to support the work of the Council;7

(C) monitor the financial services market-8

place in order to identify potential threats to the9

financial stability of the United States;10

(D) facilitate information sharing and co-11

ordination among the member agencies and other12

Federal and State agencies regarding domestic13

financial services policy development, rule-14

making, examinations, reporting requirements,15

and enforcement actions;16

(E) recommend to the member agencies gen-17

eral supervisory priorities and principles reflect-18

ing the outcome of discussions among the mem-19

ber agencies;20

(F) identify gaps in regulation that could21

pose risks to the financial stability of the United22

States;23

(G) require supervision by the Board of24

Governors for nonbank financial companies that25


29/1611

29

HR 4173 PP

may pose risks to the financial stability of the1

United States in the event of their material fi-2

nancial distress or failure, pursuant to section3

113;4

(H) make recommendations to the Board of5

Governors concerning the establishment of height-6

ened prudential standards for risk-based capital,7

leverage, liquidity, contingent capital, resolution8

plans and credit exposure reports, concentration9

limits, enhanced public disclosures, and overall10

risk management for nonbank financial compa-11

nies and large, interconnected bank holding com-12

panies supervised by the Board of Governors;13

(I) identify systemically important finan-14

cial market utilities and payment, clearing, and15

settlement activities (as that term is defined in16

title VIII), and require such utilities and activi-17

ties to be subject to standards established by the18

Board of Governors;19

(J) make recommendations to primary fi-20

nancial regulatory agencies to apply new or21

heightened standards and safeguards for finan-22

cial activities or practices that could create or23

increase risks of significant liquidity, credit, or24

other problems spreading among bank holding25


30/1611

30

HR 4173 PP

companies, nonbank financial companies, and1

United States financial markets;2

(K) make determinations regarding exemp-3

tions in title VII, where necessary;4

(L) provide a forum for5

(i) discussion and analysis of emerging6

market developments and financial regu-7

latory issues; and8

(ii) resolution of jurisdictional disputes9

among the members of the Council; and10

(M) annually report to and testify before11

Congress on12

(i) the activities of the Council;13

(ii) significant financial market devel-14

opments and potential emerging threats to15

the financial stability of the United States;16

(iii) all determinations made under17

section 113 or title VIII, and the basis for18

such determinations; and19

(iv) recommendations20

(I) to enhance the integrity, effi-21

ciency, competitiveness, and stability22

of United States financial markets;23

(II) to promote market discipline;24

and25


31/1611

31

HR 4173 PP

(III) to maintain investor con-1

fidence.2

(b) AUTHORITY TO OBTAININFORMATION.3

(1) I N GENERAL.The Council may receive, and4

may request the submission of, any data or informa-5

tion from the Office of Financial Research and mem-6

ber agencies, as necessary7

(A) to monitor the financial services mar-8

ketplace to identify potential risks to the finan-9

cial stability of the United States; or10

(B) to otherwise carry out any of the provi-11

sions of this title.12

(2) SUBMISSIONS BY THE OFFICE AND MEMBER13

AGENCIES.Notwithstanding any other provision of14

law, the Office of Financial Research and any mem-15

ber agency are authorized to submit information to16

the Council.17

(3) FINANCIAL DATA COLLECTION.18

(A) I N GENERAL.The Council, acting19

through the Office of Financial Research, may20

require the submission of periodic and other re-21

ports from any nonbank financial company or22

bank holding company for the purpose of assess-23

ing the extent to which a financial activity or fi-24

nancial market in which the nonbank financial25


32/1611

32

HR 4173 PP

company or bank holding company participates,1

or the nonbank financial company or bank hold-2

ing company itself, poses a threat to the finan-3

cial stability of the United States.4

(B) M ITIGATION OF REPORT BURDEN.Be-5

fore requiring the submission of reports from any6

nonbank financial company or bank holding7

company that is regulated by a member agency8

or any primary financial regulatory agency, the9

Council, acting through the Office of Financial10

Research, shall coordinate with such agencies11

and shall, whenever possible, rely on information12

available from the Office of Financial Research13

or such agencies.14

(4) BACK

-UP EXAMINATION BY THE BOARD OF

15

GOVERNORS.If the Council is unable to determine16

whether the financial activities of a nonbank finan-17

cial company pose a threat to the financial stability18

of the United States, based on information or reports19

obtained under paragraph (3), discussions with man-20

agement, and publicly available information, the21

Council may request the Board of Governors, and the22

Board of Governors is authorized, to conduct an ex-23

amination of the nonbank financial company for the24

sole purpose of determining whether the nonbank fi-25


33/1611

33

HR 4173 PP

nancial company should be supervised by the Board1

of Governors for purposes of this title.2

(5) CONFIDENTIALITY.3

(A) I N GENERAL.The Council, the Office4

of Financial Research, and the other member5

agencies shall maintain the confidentiality of6

any data, information, and reports submitted7

under this subsection and subtitle B.8

(B) R ETENTION OF PRIVILEGE.The sub-9

mission of any nonpublicly available data or in-10

formation under this subsection and subtitle B11

shall not constitute a waiver of, or otherwise af-12

fect, any privilege arising under Federal or State13

law (including the rules of any Federal or State14

court) to which the data or information is other-15

wise subject.16

(C) F REEDOM OF INFORMATION ACT.Sec-17

tion 552 of title 5, United States Code, including18

the exceptions thereunder, shall apply to any19

data or information submitted under this sub-20

section and subtitle B.21


34/1611

34

HR 4173 PP

SEC. 113. AUTHORITY TO REQUIRE SUPERVISION AND REG-1

ULATION OF CERTAIN NONBANK FINANCIAL2

COMPANIES.3

(a) U.S. NONBANK FINANCIAL COMPANIES SUPER-4

VISED BY THEBOARD OF GOVERNORS.5

(1) DETERMINATION.The Council, on a non-6

delegable basis and by a vote of not fewer than 23 of7

the members then serving, including an affirmative8

vote by the Chairperson, may determine that a U.S.9

nonbank financial company shall be supervised by the10

Board of Governors and shall be subject to prudential11

standards, in accordance with this title, if the Council12

determines that material financial distress at the13

U.S. nonbank financial company would pose a threat14

to the financial stability of the United States.15

(2) CONSIDERATIONS.Each determination16

under paragraph (1) shall be based on a consider-17

ation by the Council of18

(A) the degree of leverage of the company;19

(B) the amount and nature of the financial20

assets of the company;21

(C) the amount and types of the liabilities22

of the company, including the degree of reliance23

on short-term funding;24

(D) the extent and types of the off-balance-25

sheet exposures of the company;26


35/1611

35

HR 4173 PP

(E) the extent and types of the transactions1

and relationships of the company with other sig-2

nificant nonbank financial companies and sig-3

nificant bank holding companies;4

(F) the importance of the company as a5

source of credit for households, businesses, and6

State and local governments and as a source of7

liquidity for the United States financial system;8

(G) the recommendation, if any, of a mem-9

ber of the Council;10

(H) the operation of, or ownership interest11

in, any clearing, settlement, or payment business12

of the company;13

(I) the extent to which14

(i) assets are managed rather than15

owned by the company; and16

(ii) ownership of assets under manage-17

ment is diffuse; and18

(J) any other factors that the Council deems19

appropriate.20

(b) FOREIGN NONBANK FINANCIAL COMPANIES SU-21

PERVISED BY THEBOARD OF GOVERNORS.22

(1) DETERMINATION.The Council, on a non-23

delegable basis and by a vote of not fewer than 23 of24

the members then serving, including an affirmative25


36/1611

36

HR 4173 PP

vote by the Chairperson, may determine that a for-1

eign nonbank financial company that has substantial2

assets or operations in the United States shall be su-3

pervised by the Board of Governors and shall be sub-4

ject to prudential standards in accordance with this5

title, if the Council determines that material financial6

distress at the foreign nonbank financial company7

would pose a threat to the financial stability of the8

United States.9

(2) CONSIDERATIONS.Each determination10

under paragraph (1) shall be based on a consider-11

ation by the Council of12

(A) the degree of leverage of the company;13

(B) the amount and nature of the United14

States financial assets of the company;15

(C) the amount and types of the liabilities16

of the company used to fund activities and oper-17

ations in the United States, including the degree18

of reliance on short-term funding;19

(D) the extent of the United States-related20

off-balance-sheet exposure of the company;21

(E) the extent and type of the transactions22

and relationships of the company with other sig-23

nificant nonbank financial companies and bank24

holding companies;25


37/1611

37

HR 4173 PP

(F) the importance of the company as a1

source of credit for United States households,2

businesses, and State and local governments, and3

as a source of liquidity for the United States fi-4

nancial system;5

(G) the recommendation, if any, of a mem-6

ber of the Council;7

(H) the extent to which8

(i) assets are managed rather than9

owned by the company; and10

(ii) ownership of assets under manage-11

ment is diffuse; and12

(I) any other factors that the Council deems13

appropriate.14

(c) ANTI

-EVASION

.15

(1) DETERMINATIONS.In order to avoid eva-16

sion of this Act, the Council, on its own initiative or17

at the request of the Board of Governors, may deter-18

mine, on a nondelegable basis and by a vote of not19

fewer than 23 of the members then serving, including20

an affirmative vote by the Chairperson, that21

(A) material financial distress related to fi-22

nancial activities conducted directly or indi-23

rectly by a company incorporated or organized24

under the laws of the United States or any State25


38/1611

38

HR 4173 PP

or the financial activities in the United States of1

a company incorporated or organized in a coun-2

try other than the United States would pose a3

threat to the financial stability of the United4

States based on consideration of the factors in5

subsection (b)(2);6

(B) the company is organized or operates in7

such a manner as to evade the application of8

this title;9

(C) such financial activities of the company10

shall be supervised by the Board of Governors11

and subject to prudential standards in accord-12

ance with this title consistent with paragraph13

(2); and14

(D) upon making a determination under15

subsection (c)(1), the Council shall submit a re-16

port to the appropriate committees of Congress17

detailing the reasons for making such determina-18

tion under this subsection.19

(2) Consolidated supervision of only financial20

activities; Establishment of an intermediate holding21

company.22

(A) ESTABLISHMENT OF AN INTERMEDIATE23

HOLDING COMPANY.Upon a determination24

under paragraph (1), the company may establish25


39/1611

39

HR 4173 PP

an intermediate holding company in which the1

financial activities of such company and its sub-2

sidiaries will be conducted (other than the activi-3

ties described in section 167(b)(2) in compliance4

with any regulations or guidance provided by5

the Board of Governors). Such intermediate hold-6

ing company shall be subject to the supervision7

of the Board of Governors and to prudential8

standards under this title as if the intermediate9

holding company is a nonbank financial com-10

pany supervised by the Board of Governors.11

(B) ACTION OF THE BOARD OF GOV -12

ERNORS.To facilitate the supervision of the fi-13

nancial activities subject to the determination in14

paragraph (1), the Board of Governors may re-15

quire a company to establish an intermediate16

holding company, as provided for in section 167,17

which would be subject to the supervision of the18

Board of Governors and to prudential standards19

under this title as if the intermediate holding20

company is a nonbank financial company super-21

vised by the Board of Governors.22

(3) NOTICE AND OPPORTUNITY FOR HEARING23

AND FINAL DETERMINATION; JUDICIAL REVIEW.Sub-24

sections (d), (f), and (g) shall apply to determinations25


40/1611

40

HR 4173 PP

made by the Council pursuant to paragraph (1) in1

the same manner as such subsections apply to2

nonbank financial companies.3

(4) COVERED FINANCIAL ACTIVITIES.For pur-4

poses of this subsection, the term financial activi-5

ties means activities that are financial in nature (as6

defined in section 4(k) of the Bank Holding Company7

Act of 1956) and include the ownership or control of8

one or more insured depository institutions and shall9

not include internal financial activities conducted for10

the company or any affiliates thereof including inter-11

nal treasury, investment, and employee benefit func-12

tions.13

(5) O NLY FINANCIAL ACTIVITIES SUBJECT TO14

PRUDENTIAL SUPERVISION.Nonfinancial activities

15

of the company shall not be subject to supervision by16

the Board of Governors and prudential standards of17

the Board. For purposes of this Act, the financial ac-18

tivities that are the subject of the determination in19

paragraph (1) shall be subject to the same require-20

ments as a nonbank financial company. Nothing in21

this paragraph shall prohibit or limit the authority22

of the Board of Governors to apply prudential stand-23

ards under this title to the financial activities that24

are subject to the determination in paragraph (1).25


41/1611

41

HR 4173 PP

(d) R EEVALUATION AND RESCISSION.The Council1

shall2

(1) not less frequently than annually, reevaluate3

each determination made under subsections (a) and4

(b) with respect to each nonbank financial company5

supervised by the Board of Governors; and6

(2) rescind any such determination, if the Coun-7

cil, by a vote of not fewer than 23 of the members then8

serving, including an affirmative vote by the Chair-9

person, determines that the nonbank financial com-10

pany no longer meets the standards under subsection11

(a) or (b), as applicable.12

(e) NOTICE AND O PPORTUNITY FOR H EARING AND13

FINALDETERMINATION.14

(1) I N GENERAL

.The Council shall provide to15

a nonbank financial company written notice of a pro-16

posed determination of the Council, including an ex-17

planation of the basis of the proposed determination18

of the Council, that such nonbank financial company19

shall be supervised by the Board of Governors and20

shall be subject to prudential standards in accordance21

with this title.22

(2) HEARING.Not later than 30 days after the23

date of receipt of any notice of a proposed determina-24

tion under paragraph (1), the nonbank financial25


42/1611

42

HR 4173 PP

company may request, in writing, an opportunity for1

a written or oral hearing before the Council to contest2

the proposed determination. Upon receipt of a timely3

request, the Council shall fix a time (not later than4

30 days after the date of receipt of the request) and5

place at which such company may appear, personally6

or through counsel, to submit written materials (or,7

at the sole discretion of the Council, oral testimony8

and oral argument).9

(3) F INAL DETERMINATION.Not later than 6010

days after the date of a hearing under paragraph (2),11

the Council shall notify the nonbank financial com-12

pany of the final determination of the Council, which13

shall contain a statement of the basis for the decision14

of the Council.15

(4) NO HEARING REQUESTED.If a nonbank fi-16

nancial company does not make a timely request for17

a hearing, the Council shall notify the nonbank finan-18

cial company, in writing, of the final determination19

of the Council under subsection (a) or (b), as applica-20

ble, not later than 10 days after the date by which the21

company may request a hearing under paragraph22

(2).23

(f) EMERGENCYEXCEPTION.24


43/1611

43

HR 4173 PP

(1) I N GENERAL.The Council may waive or1

modify the requirements of subsection (d) with respect2

to a nonbank financial company, if the Council deter-3

mines, by a vote of not fewer than 23 of the members4

then serving, including an affirmative vote by the5

Chairperson, that such waiver or modification is nec-6

essary or appropriate to prevent or mitigate threats7

posed by the nonbank financial company to the finan-8

cial stability of the United States.9

(2) NOTICE.The Council shall provide notice of10

a waiver or modification under this paragraph to the11

nonbank financial company concerned as soon as12

practicable, but not later than 24 hours after the13

waiver or modification is granted.14

(3) O PPORTUNITY FOR HEARING

.The Council15

shall allow a nonbank financial company to request,16

in writing, an opportunity for a written or oral hear-17

ing before the Council to contest a waiver or modi-18

fication under this paragraph, not later than 10 days19

after the date of receipt of notice of the waiver or20

modification by the company. Upon receipt of a time-21

ly request, the Council shall fix a time (not later than22

15 days after the date of receipt of the request) and23

place at which the nonbank financial company may24

appear, personally or through counsel, to submit writ-25


44/1611

44

HR 4173 PP

ten materials (or, at the sole discretion of the Council,1

oral testimony and oral argument).2

(4) NOTICE OF FINAL DETERMINATION.Not3

later than 30 days after the date of any hearing4

under paragraph (3), the Council shall notify the sub-5

ject nonbank financial company of the final deter-6

mination of the Council under this paragraph, which7

shall contain a statement of the basis for the decision8

of the Council.9

(g) CONSULTATION.The Council shall consult with10

the primary financial regulatory agency, if any, for each11

nonbank financial company or subsidiary of a nonbank fi-12

nancial company that is being considered for supervision13

by the Board of Governors under this section before the14

Council makes any final determination with respect to such15

nonbank financial company under subsection (a), (b), or16

(c).17

(h) JUDICIAL REVIEW.If the Council makes a final18

determination under this section with respect to a nonbank19

financial company, such nonbank financial company may,20

not later than 30 days after the date of receipt of the notice21

of final determination under subsection (d)(3) or (e)(4),22

bring an action in the United States district court for the23

judicial district in which the home office of such nonbank24

financial company is located, or in the United States Dis-25


45/1611

45

HR 4173 PP

trict Court for the District of Columbia, for an order requir-1

ing that the final determination be rescinded, and the court2

shall, upon review, dismiss such action or direct the final3

determination to be rescinded. Review of such an action4

shall be limited to whether the final determination made5

under this section was arbitrary and capricious.6

SEC. 114. REGISTRATION OF NONBANK FINANCIAL COMPA-7

NIES SUPERVISED BY THE BOARD OF GOV-8

ERNORS.9

Not later than 180 days after the date of a final Coun-10

cil determination under section 113 that a nonbank finan-11

cial company is to be supervised by the Board of Governors,12

such company shall register with the Board of Governors,13

on forms prescribed by the Board of Governors, which shall14

include such information as the Board of Governors, in con-15

sultation with the Council, may deem necessary or appro-16

priate to carry out this title.17

SEC. 115. ENHANCED SUPERVISION AND PRUDENTIAL18

STANDARDS FOR NONBANK FINANCIAL COM-19

PANIES SUPERVISED BY THE BOARD OF GOV-20

ERNORS AND CERTAIN BANK HOLDING COM-21

PANIES.22

(a) IN GENERAL.23

(1) PURPOSE.In order to prevent or mitigate24

risks to the financial stability of the United States25


46/1611

46

HR 4173 PP

that could arise from the material financial distress1

or failure of large, interconnected financial institu-2

tions, the Council may make recommendations to the3

Board of Governors concerning the establishment and4

refinement of prudential standards and reporting and5

disclosure requirements applicable to nonbank finan-6

cial companies supervised by the Board of Governors7

and large, interconnected bank holding companies,8

that9

(A) are more stringent than those applicable10

to other nonbank financial companies and bank11

holding companies that do not present similar12

risks to the financial stability of the United13

States; and14

(B) increase in stringency, based on the15

considerations identified in subsection (b)(3).16

(2) L IMITATION ON BANK HOLDING COMPA-17

NIES.Any standards recommended under sub-18

sections (b) through (f) shall not apply to any bank19

holding company with total consolidated assets of less20

than $50,000,000,000. The Council may recommend21

an asset threshold greater than $50,000,000,000 for22

the applicability of any particular standard under23

those subsections.24

(b) D EVELOPMENT OFPRUDENTIAL STANDARDS.25


47/1611

47

HR 4173 PP

(1) I N GENERAL.The recommendations of the1

Council under subsection (a) may include2

(A) risk-based capital requirements;3

(B) leverage limits;4

(C) liquidity requirements;5

(D) resolution plan and credit exposure re-6

port requirements;7

(E) concentration limits;8

(F) a contingent capital requirement;9

(G) enhanced public disclosures; and10

(H) overall risk management requirements.11

(2) P RUDENTIAL STANDARDS FOR FOREIGN FI-12

NANCIAL COMPANIES.In making recommendations13

concerning the standards set forth in paragraph (1)14

that would apply to foreign nonbank financial com-15

panies supervised by the Board of Governors or for-16

eign-based bank holding companies, the Council shall17

give due regard to the principle of national treatment18

and competitive equity.19

(3) CONSIDERATIONS.In making recommenda-20

tions concerning prudential standards under para-21

graph (1), the Council shall22

(A) take into account differences among23

nonbank financial companies supervised by the24


48/1611

48

HR 4173 PP

Board of Governors and bank holding companies1

described in subsection (a), based on2

(i) the factors described in subsections3

(a) and (b) of section 113;4

(ii) whether the company owns an in-5

sured depository institution;6

(iii) nonfinancial activities and affili-7

ations of the company; and8

(iv) any other factors that the Council9

determines appropriate; and10

(B) to the extent possible, ensure that small11

changes in the factors listed in subsections (a)12

and (b) of section 113 would not result in sharp,13

discontinuous changes in the prudential stand-14

ards established under paragraph (1).15

(c) CONTINGENT CAPITAL.16

(1) STUDY REQUIRED.The Council shall con-17

duct a study of the feasibility, benefits, costs, and18

structure of a contingent capital requirement for19

nonbank financial companies supervised by the Board20

of Governors and bank holding companies described21

in subsection (a), which study shall include22

(A) an evaluation of the degree to which23

such requirement would enhance the safety and24

soundness of companies subject to the require-25


49/1611

49

HR 4173 PP

ment, promote the financial stability of the1

United States, and reduce risks to United States2

taxpayers;3

(B) an evaluation of the characteristics and4

amounts of convertible debt that should be re-5

quired;6

(C) an analysis of potential prudential7

standards that should be used to determine8

whether the contingent capital of a company9

would be converted to equity in times of finan-10

cial stress;11

(D) an evaluation of the costs to companies,12

the effects on the structure and operation of cred-13

it and other financial markets, and other eco-14

nomic effects of requiring contingent capital;15

(E) an evaluation of the effects of such re-16

quirement on the international competitiveness17

of companies subject to the requirement and the18

prospects for international coordination in estab-19

lishing such requirement; and20

(F) recommendations for implementing reg-21

ulations.22

(2) REPORT.The Council shall submit a report23

to Congress regarding the study required by para-24


50/1611

50

HR 4173 PP

graph (1) not later than 2 years after the date of en-1

actment of this Act.2

(3) RECOMMENDATIONS.3

(A) I N GENERAL.Subsequent to submit-4

ting a report to Congress under paragraph (2),5

the Council may make recommendations to the6

Board of Governors to require any nonbank fi-7

nancial company supervised by the Board of8

Governors and any bank holding company de-9

scribed in subsection (a) to maintain a min-10

imum amount of long-term hybrid debt that is11

convertible to equity in times of financial stress.12

(B) F ACTORS TO CONSIDER.In making13

recommendations under this subsection, the14

Council shall consider15

(i) an appropriate transition period16

for implementation of a conversion under17

this subsection;18

(ii) the factors described in subsection19

(b)(3);20

(iii) capital requirements applicable to21

a nonbank financial company supervised by22

the Board of Governors or a bank holding23

company described in subsection (a), and24

subsidiaries thereof;25


51/1611

51

HR 4173 PP

(iv) results of the study required by1

paragraph (1); and2

(v) any other factor that the Council3

deems appropriate.4

(d) RESOLUTIONP LAN AND CREDIT EXPOSURE RE-5

PORTS.6

(1) R ESOLUTION PLAN.The Council may make7

recommendations to the Board of Governors con-8

cerning the requirement that each nonbank financial9

company supervised by the Board of Governors and10

each bank holding company described in subsection11

(a) report periodically to the Council, the Board of12

Governors, and the Corporation, the plan of such13

company for rapid and orderly resolution in the event14

of material financial distress or failure.15

(2) C REDIT EXPOSURE REPORT.The Council16

may make recommendations to the Board of Gov-17

ernors concerning the advisability of requiring each18

nonbank financial company supervised by the Board19

of Governors and bank holding company described in20

subsection (a) to report periodically to the Council,21

the Board of Governors, and the Corporation on22

(A) the nature and extent to which the com-23

pany has credit exposure to other significant24


52/1611

52

HR 4173 PP

nonbank financial companies and significant1

bank holding companies; and2

(B) the nature and extent to which other3

such significant nonbank financial companies4

and significant bank holding companies have5

credit exposure to that company.6

(e) CONCENTRATION LIMITS.In order to limit the7

risks that the failure of any individual company could pose8

to nonbank financial companies supervised by the Board9

of Governors or bank holding companies described in sub-10

section (a), the Council may make recommendations to the11

Board of Governors to prescribe standards to limit such12

risks, as set forth in section 165.13

(f) ENHANCED PUBLIC DISCLOSURES.The Council14

may make recommendations to the Board of Governors to15

require periodic public disclosures by bank holding compa-16

nies described in subsection (a) and by nonbank financial17

companies supervised by the Board of Governors, in order18

to support market evaluation of the risk profile, capital ade-19

quacy, and risk management capabilities thereof.20

SEC. 116. REPORTS.21

(a) IN GENERAL.Subject to subsection (b), the Coun-22

cil, acting through the Office of Financial Research, may23

require a bank holding company with total consolidated as-24

sets of $50,000,000,000 or greater or a nonbank financial25


53/1611

53

HR 4173 PP

company supervised by the Board of Governors, and any1

subsidiary thereof, to submit certified reports to keep the2

Council informed as to3

(1) the financial condition of the company;4

(2) systems for monitoring and controlling fi-5

nancial, operating, and other risks;6

(3) transactions with any subsidiary that is a7

depository institution; and8

(4) the extent to which the activities and oper-9

ations of the company and any subsidiary thereof,10

could, under adverse circumstances, have the potential11

to disrupt financial markets or affect the overall fi-12

nancial stability of the United States.13

(b) USE OFEXISTINGREPORTS.14

(1) I N GENERAL

.For purposes of compliance15

with subsection (a), the Council, acting through the16

Office of Financial Research, shall, to the fullest ex-17

tent possible, use18

(A) reports that a bank holding company,19

nonbank financial company supervised by the20

Board of Governors, or any functionally regu-21

lated subsidiary of such company has been re-22

quired to provide to other Federal or State regu-23

latory agencies;24


54/1611

54

HR 4173 PP

(B) information that is otherwise required1

to be reported publicly; and2

(C) externally audited financial statements.3

(2) AVAILABILITY.Each bank holding company4

described in subsection (a) and nonbank financial5

company supervised by the Board of Governors, and6

any subsidiary thereof, shall provide to the Council,7

at the request of the Council, copies of all reports re-8

ferred to in paragraph (1).9

(3) CONFIDENTIALITY.The Council shall main-10

tain the confidentiality of the reports obtained under11

subsection (a) and paragraph (1)(A) of this sub-12

section.13

SEC. 117. TREATMENT OF CERTAIN COMPANIES THAT14

CEASE TO BE BANK HOLDING COMPANIES.15

(a) APPLICABILITY.This section shall apply to any16

entity or a successor entity that17

(1) was a bank holding company having total18

consolidated assets equal to or greater than19

$50,000,000,000 as of January 1, 2010; and20

(2) received financial assistance under or par-21

ticipated in the Capital Purchase Program estab-22

lished under the Troubled Asset Relief Program au-23

thorized by the Emergency Economic Stabilization24

Act of 2008.25


55/1611

55

HR 4173 PP

(b) TREATMENT.If an entity described in subsection1

(a) ceases to be a bank holding company at any time after2

January 1, 2010, then such entity shall be treated as a3

nonbank financial company supervised by the Board of4

Governors, as if the Council had made a determination5

under section 113 with respect to that entity.6

(c) APPEAL.7

(1) R EQUEST FOR HEARING.An entity may re-8

quest, in writing, an opportunity for a written or9

oral hearing before the Council to appeal its treat-10

ment as a nonbank financial company supervised by11

the Board of Governors in accordance with this sec-12

tion. Upon receipt of the request, the Council shall fix13

a time (not later than 30 days after the date of re-14

ceipt of the request) and place at which such entity15

may appear, personally or through counsel, to submit16

written materials (or, at the sole discretion of the17

Council, oral testimony and oral argument).18

(2) DECISION.19

(A) P ROPOSED DECISION.Not later than20

60 days after the date of a hearing under para-21

graph (1), the Council shall submit a report to,22

and may testify before, the Committee on Bank-23

ing, Housing, and Urban Affairs of the Senate24

and the Committee on Financial Services of the25


56/1611

56

HR 4173 PP

House of Representatives on the proposed deci-1

sion of the Council regarding an appeal under2

paragraph (1), which report shall include a3

statement of the basis for the proposed decision4

of the Council.5

(B) NOTICE OF FINAL DECISION.The6

Council shall notify the subject entity of the final7

decision of the Council regarding an appeal8

under paragraph (1), which notice shall contain9

a statement of the basis for the final decision of10

the Council, not later than 60 days after the11

later of12

(i) the date of the submission of the re-13

port under subparagraph (A); or14

(ii) if the Committee on Banking,15

Housing, and Urban Affairs of the Senate16

or the Committee on Financial Services of17

the House of Representatives holds one or18

more hearings regarding such report, the19

date of the last such hearing.20

(C) CONSIDERATIONS.In making a deci-21

sion regarding an appeal under paragraph (1),22

the Council shall consider whether the company23

meets the standards under section 113(a) or24

113(b), as applicable, and the definition of the25


57/1611

57

HR 4173 PP

term nonbank financial company under sec-1

tion 102. The decision of the Council shall be2

final, subject to the review under paragraph (3).3

(3) REVIEW.If the Council denies an appeal4

under this subsection, the Council shall, not less fre-5

quently than annually, review and reevaluate the de-6

cision.7

SEC. 118. COUNCIL FUNDING.8

Any expenses of the Council shall be treated as expenses9

of, and paid by, the Office of Financial Research.10

SEC. 119. RESOLUTION OF SUPERVISORY JURISDICTIONAL11

DISPUTES AMONG MEMBER AGENCIES.12

(a) R EQUEST FORDISPUTERESOLUTION.The Coun-13

cil shall resolve a dispute among 2 or more member agen-14

cies, if15

(1) a member agency has a dispute with another16

member agency about the respective jurisdiction over17

a particular bank holding company, nonbank finan-18

cial company, or financial activity or product (ex-19

cluding matters for which another dispute mechanism20

specifically has been provided under 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 of the24

Council; and25


58/1611

58

HR 4173 PP

(3) any of the member agencies involved in the1

dispute2

financial regulatory reform bill 2010

Documents