Chairman Chris Dodd's Financial Reform Legislation Bill

8/14/2019 Chairman Chris Dodd's Financial Reform Legislation Bill

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O:\AYO\ AYO10306.xml [file 1 of 21] S.L.C.

COMMITTEE PRINT

Calendar No.ll

111TH CONGRESS2D SESSION S.ll

[Report No. 111lll]

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

poses.

IN THE SENATE OF THE UNITED STATES

llllllllll

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


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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 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. Exemptions 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.

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.

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.

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.


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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 GStrengthening Corporate GovernanceSec. 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 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 tothe 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



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.


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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. 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 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.


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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.

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.

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 Home Owners 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 Li-

censing Act of 2008.

Sec. 1199. 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.


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. 1103. Public access to information.

Sec. 1104. Liquidity event determination.

Sec. 1105. Emergency financial stabilization.

Sec. 1106. Additional related amendments.

Sec. 1107. Federal Reserve Act amendments on Federal reserve bank govern-

ance.

Sec. 1108. Amendments to the Federal Reserve Act relating to supervision and

regulation policy.


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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 means5

any company that controls, is controlled by, or is6

under common control with another company.7

(2) APPROPRIATE FEDERAL BANKING AGEN-8

CY.On and after the transfer date, the term ap-9

propriate Federal banking agency has the same10

meaning as in section 3(q) of the Federal Deposit11

Insurance Act (12 U.S.C. 1813(q), as amended by12

title III.13

(3) BOARD OF GOVERNORS.The term Board14

of Governors means the Board of Governors of the15

Federal Reserve System.16

(4) BUREAU.The term Bureau means the17

Bureau of Consumer Financial Protection estab-18

lished under title X.19

(5) COMMISSION.The term Commission20

means the Securities and Exchange Commission, ex-21

cept in the context of the Commodity Futures Trad-22

ing Commission.23

(6) CORPORATION.The term Corporation24

means the Federal Deposit Insurance Corporation.25


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(7) COUNCIL.The term Council means the1

Financial Stability Oversight Council established2

under title I.3

(8) CREDIT UNION.The term credit union4

means a Federal credit union, State credit union, or5

State-chartered credit union, as those terms are de-6

fined in section 101 of the Federal Credit Union Act7

(12 U.S.C. 1752).8

(9) FEDERAL BANKING AGENCY.The term9

(A) Federal banking agency means, indi-10

vidually, the Board of Governors, the Office of11

the Comptroller of the Currency, and the Cor-12

poration; and13

(B) Federal banking agencies means all14

of the agencies referred to in subparagraph (A),15

collectively.16

(10) FUNCTIONALLY REGULATED SUB-17

SIDIARY.The term functionally regulated sub-18

sidiary has the same meaning as in section 5(c)(5)19

of the Bank Holding Company Act of 1956 (1220

U.S.C. 1844(c)(5)).21

(11) PRIMARY FINANCIAL REGULATORY AGEN-22

CY.The term primary financial regulatory agen-23

cy means24


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(A) the appropriate Federal banking agen-1

cy, with respect to institutions described in sec-2

tion 3(q ) of the Federal Deposit Insurance3

Act;4

(B) the Securities and Exchange Commis-5

sion, with respect to6

(i) any broker or dealer that is reg-7

istered with the Commission under the Se-8

curities Exchange Act of 1934;9

(ii) any investment company that is10

registered with the Commission under the11

Investment Company Act of 1940;12

(iii) any investment adviser that is13

registered with the Commission under the14

Investment Advisers Act of 1940, with re-15

spect to the investment advisory activities16

of such company and activities that are in-17

cidental to such advisory activities;18

(iv) any financial planner that is reg-19

istered with the Commission under the Fi-20

nancial Planners Act of 2010; and21

(v) any clearing agency registered22

with the Commission under the Securities23

Exchange Act of 1934;24


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(C) the Commodity Futures Trading Com-1

mission, with respect to any futures commission2

merchant, any commodity trading adviser, and3

any commodity pool operator registered with4

the Commodity Futures Trading Commission5

under the Commodity Exchange Act, with re-6

spect to the commodities activities of such enti-7

ty and activities that are incidental to such8

commodities activities; and9

(D) the State insurance authority of the10

State in which an insurance company is domi-11

ciled, with respect to the insurance activities12

and activities that are incidental to such insur-13

ance activities of an insurance company that is14

subject to supervision by the State insurance15

authority under State insurance law.16

(12) PRUDENTIAL STANDARDS.The term17

prudential standards means enhanced supervision18

and regulatory standards developed by the Board of19

Governors under section 115 or 165.20

(13) SECRETARY.The term Secretary21

means the Secretary of the Treasury.22

(14) SECURITIES TERMS.The23

(A) terms broker, dealer, issuer,24

nationally recognized statistical ratings organi-25


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including, insured branch, insured deposi-1

tory institution, national member bank,2

national nonmember bank, savings associa-3

tion, State bank, State depository institu-4

tion, State member bank, State non-5

member bank, State savings association,6

and subsidiary have the same meanings as in7

section 3 of the Federal Deposit Insurance Act8

(12 U.S.C. 1813).9

(B) HOLDING COMPANIES.The term10

(i) bank holding company has the11

same meaning as in section 2 of the Bank12

Holding Company Act of 1956 (12 U.S.C.13

1841);14

(ii) financial holding company has15

the same meaning as in section 2(p) of the16

Bank Holding Company Act of 1956 (1217

U.S.C. 1841(p)); and18

(iii) savings and loan holding com-19

pany has the same meaning as in section20

10 of the Home Owners Loan Act (1221

U.S.C. 1467a(a)).22

SEC. 3. SEVERABILITY.23

If any provision of this Act, an amendment made by24

this Act, or the application of such provision or amend-25


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ment to any person or circumstance is held to be unconsti-1

tutional, the remainder of this Act, the amendments made2

by this Act, and the application of the provisions of such3

to any person or circumstance shall not be affected there-4

by.5

SEC. 4. EFFECTIVE DATE.6

Except as otherwise specifically provided in this Act7

or the amendments made by this Act, this Act and such8

amendments shall take effect on the date of enactment9

of this Act.10

TITLE IFINANCIAL STABILITY11

SEC. 101. SHORT TITLE.12

This title may be cited as the Financial Stability Act13

of 2010.14


(a) IN GENERAL.For purposes of this title, unless16

the context otherwise requires, the following definitions17

shall apply:18

(1) B ANK HOLDING COMPANY.The term19

bank holding company has the same meaning as20

in section 2 of the Bank Holding Company Act of21

1956 (12 U.S.C. 1841). A foreign bank or company22

that is treated as a bank holding company for pur-23

poses of the Bank Holding Company Act of 1956,24

pursuant to section 8(a) of the International Bank-25


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ing Act of 1978 (12 U.S.C. 3106(a)), shall be treat-1

ed as a bank holding company for purposes of this2

title.3

(2) MEMBER AGENCY.The term member4

agency means an agency represented by a member5

of the Council.6

(3) NONBANK FINANCIAL COMPANY DEFINI-7

TIONS.8

(A) FOREIGN NONBANK FINANCIAL COM-9

PANY.The term foreign nonbank financial10

company means a company (other than a com-11

pany that is, or is treated in the United States,12

as a bank holding company or a subsidiary13

thereof) that is14

(i) incorporated or organized in a15

country other than the United States; and16

(ii) substantially engaged in, including17

through a branch in the United States, ac-18

tivities in the United States that are finan-19

cial in nature (as defined in section 4(k) of20

the Bank Holding Company Act of 1956).21

(B) U.S. NONBANK FINANCIAL COM-22

PANY.The term U.S. nonbank financial com-23

pany means a company (other than a bank24


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holding company or a subsidiary thereof) that1

is2

(i) incorporated or organized under3

the laws of the United States or any State;4

and5

(ii) substantially engaged in activities6

in the United States that are financial in7

nature (as defined in section 4(k) of the8

Bank Holding Company Act of 1956).9

(C) NONBANK FINANCIAL COMPANY.The10

term nonbank financial company means a11

U.S. nonbank financial company and a foreign12

nonbank financial company.13

(4) OFFICE OF FINANCIAL RESEARCH.The14

term Office of Financial Research means the of-15

fice established under section 152.16

(5) SIGNIFICANT INSTITUTIONS.The terms17

significant nonbank financial company and sig-18

nificant bank holding company have the meanings19

given those terms by rule of the Board of Governors.20

(b) DEFINITIONAL CRITERIA.The Board of Gov-21

ernors shall establish, by regulation, the criteria to deter-22

mine whether a company is substantially engaged in activi-23

ties in the United States that are financial in nature (as24

defined in section 4(k) of the Bank Holding Company Act25


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of 1956) for purposes of the definitions of the terms U.S.1

nonbank financial company and foreign nonbank finan-2

cial company under subsection (a)(4).3

(c) FOREIGN NONBANK FINANCIAL COMPANIES.4

For purposes of the authority of the Board of Governors5

under this title with respect to foreign nonbank financial6

companies, references in this title to company or sub-7

sidiary include only the United States activities and sub-8

sidiaries of such foreign company.9

Subtitle AFinancial Stability10

Oversight Council11

SEC. 111. FINANCIAL STABILITY OVERSIGHT COUNCIL ES-12

TABLISHED.13

(a) ESTABLISHMENT.Effective on the date of en-14

actment of this Act, there is established the Financial Sta-15

bility Oversight Council.16

(b) MEMBERSHIP.The Council shall consist of the17

following:18

(1) VOTING MEMBERS.The voting members,19

who shall each have 1 vote on the Council shall be20

(A) the Secretary of the Treasury, who21

shall serve as chairperson of the Council;22

(B) the Chairman of the Board of Gov-23

ernors;24

(C) the Comptroller of the Currency;25


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(D) the Director of the Bureau;1

(E) the Chairman of the Commission;2

(F) the Chairperson of the Corporation;3

(G) the Chairperson of the Commodity Fu-4

tures Trading Commission;5

(H) the Director of the Federal Housing6

Finance Agency; and7

(I) an independent member appointed by8

the President, by and with the advice and con-9

sent of the Senate, having insurance expertise.10

(2) NONVOTING MEMBERS.The Director of11

the Office of Financial Research12

(A) shall serve in an advisory capacity as13

a nonvoting member of the Council; and14

(B) may not be excluded from any of the15

proceedings, meetings, discussions, or delibera-16

tions of the Council.17

(c) TERMS; VACANCY.18

(1) TERMS.The independent member of the19

Council shall serve for a term of 6 years.20

(2) VACANCY.Any vacancy on the Council21

shall be filled in the manner in which the original22

appointment was made.23

(3) ACTING OFFICIALS MAY SERVE.In the24

event of a vacancy in the office of the head of a25


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member agency or department, and pending the ap-1

pointment of a successor, or during the absence or2

disability of the head of a member agency or depart-3

ment, the acting head of the member agency or de-4

partment shall serve as a member of the Council in5

the place of that agency or department head.6

(d) TECHNICAL AND PROFESSIONALADVISORY COM-7

MITTEES.The Council may appoint such special advi-8

sory, technical, or professional committees as may be use-9

ful in carrying out the functions of the Council, including10

an advisory committee consisting of State regulators, and11

the members of such committees may be members of the12

Council, or other persons, or both.13

(e) MEETINGS.14

(1) TIMING.The Council shall meet at the call15

of the Chairperson or a majority of the members16

then serving, but not less frequently than quarterly.17

(2) RULES FOR CONDUCTING BUSINESS.The18

Council shall adopt such rules as may be necessary19

for the conduct of the business of the Council. Such20

rules shall be rules of agency organization, proce-21

dure, or practice for purposes of section 553 of title22

5, United States Code.23


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(f) VOTING.Unless otherwise specified, the Council1

shall make all decisions that it is authorized or required2

to make by a majority vote of the members then serving.3

(g) NONAPPLICABILITY OF FACA.The Federal Ad-4

visory Committee Act (5 U.S.C. App.) shall not apply to5

the Council, or to any special advisory, technical, or pro-6

fessional committee appointed by the Council, except that,7

if an advisory, technical, or professional committee has8

one or more members who are not employees of or affili-9

ated with the United States Government, the Council shall10

publish a list of the names of the members of such com-11

mittee.12

(h) ASSISTANCE FROM FEDERAL AGENCIES.Any13

department or agency of the United States may provide14

to the Council and any special advisory, technical, or pro-15

fessional committee appointed by the Council, such serv-16

ices, funds, facilities, staff, and other support services as17

the Council may determine advisable.18

(i) COMPENSATION OF MEMBERS.19

(1) FEDERAL EMPLOYEE MEMBERS.All mem-20

bers of the Council who are officers or employees of21

the United States shall serve without compensation22

in addition to that received for their services as offi-23

cers or employees of the United States.24


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(2) COMPENSATION FOR NON-FEDERAL MEM-1

BER.Section 5314 of title 5, United States Code,2

is amended by adding at the end the following:3

Independent Member of the Financial Stability4

Oversight Council (1)..5

(j) DETAIL OF GOVERNMENT EMPLOYEES.Any em-6

ployee of the Federal Government may be detailed to the7

Council without reimbursement, and such detail shall be8

without interruption or loss of civil service status or privi-9

lege. An employee of the Federal Government detailed to10

the Council shall report to and be subject to oversight by11

the Council during the assignment to the Council, and12

shall be compensated by the department or agency from13

which the employee was detailed.14

SEC. 112. COUNCIL AUTHORITY.15

(a) PURPOSES AND DUTIES OF THE COUNCIL.16

(1) IN GENERAL.The purposes of the Council17

are18

(A) to identify risks to the financial sta-19

bility of the United States that could arise from20

the material financial distress or failure of21

large, interconnected bank holding companies or22

nonbank financial companies;23

(B) to promote market discipline, by elimi-24

nating expectations on the part of shareholders,25


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creditors, and counterparties of such companies1

that the Government will shield them from2

losses in the event of failure; and3

(C) to respond to emerging threats to the4

stability of the United States financial markets.5

(2) DUTIES.The Council shall, in accordance6

with this title7

(A) collect information from member agen-8

cies and other Federal and State financial regu-9

latory agencies and, if necessary to assess risks10

to the United States financial system, direct the11

Office of Financial Research to collect informa-12

tion from bank holding companies and nonbank13

financial companies;14

(B) provide direction to, and request data15

and analyses from, the Office of Financial Re-16

search to support the work of the Council;17

(C) monitor the financial services market-18

place in order to identify potential threats to19

the financial stability of the United States;20

(D) facilitate information sharing and co-21

ordination among the member agencies and22

other Federal and State agencies regarding do-23

mestic financial services policy development,24


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rulemaking, examinations, reporting require-1

ments, and enforcement actions;2

(E) recommend to the member agencies3

general supervisory priorities and principles re-4

flecting the outcome of discussions among the5

member agencies;6

(F) identify gaps in regulation that could7

pose risks to the financial stability of the8

United States;9

(G) require supervision by the Board of10

Governors for nonbank financial companies that11

may pose risks to the financial stability of the12

United States in the event of their material fi-13

nancial distress or failure, pursuant to section14

113;15

(H) make recommendations to the Board16

of Governors concerning the establishment of17

heightened prudential standards for risk-based18

capital, leverage, liquidity, contingent capital,19

resolution plans and credit exposure reports,20

concentration limits, enhanced public disclo-21

sures, and overall risk management for22

nonbank financial companies and large, inter-23

connected bank holding companies supervised24

by the Board of Governors;25


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(I) identify systemically important finan-1

cial market utilities and payment, clearing, and2

settlement activities (as that term is defined in3

title VIII), and require such utilities and activi-4

ties to be subject to standards established by5

the Board of Governors;6

(J) make recommendations to primary fi-7

nancial regulatory agencies to apply new or8

heightened standards and safeguards for finan-9

cial activities or practices that could create or10

increase risks of significant liquidity, credit, or11

other problems spreading among bank holding12

companies, nonbank financial companies, and13

United States financial markets;14

(K) provide a forum for15

(i) discussion and analysis of emerg-16

ing market developments and financial reg-17

ulatory issues; and18

(ii) resolution of jurisdictional dis-19

putes among the members of the Council;20

and21

(L) annually report to and testify before22

Congress on23

(i) the activities of the Council;24


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(ii) significant financial market devel-1

opments and potential emerging threats to2

the financial stability of the United States;3

(iii) all determinations made under4

section 113 or title VIII, and the basis for5

such determinations; and6

(iv) recommendations7

(I) to enhance the integrity, effi-8

ciency, competitiveness, and stability9

of United States financial markets;10

(II) to promote market discipline;11

and12

(III) to maintain investor con-13

fidence.14

(b) AUTHORITY TO OBTAIN INFORMATION.15

(1) IN GENERAL.The Council may receive,16

and may request the submission of, any data or in-17

formation from the Office of Financial Research and18

member agencies, as necessary19

(A) to monitor the financial services mar-20

ketplace to identify potential risks to the finan-21

cial stability of the United States; or22

(B) to otherwise carry out any of the pro-23

visions of this title.24


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(2) SUBMISSIONS BY THE OFFICE AND MEMBER1

AGENCIES.Notwithstanding any other provision of2

law, the Office of Financial Research and any mem-3

ber agency are authorized to submit information to4

the Council.5

(3) FINANCIAL DATA COLLECTION.6

(A) IN GENERAL.The Council, acting7

through the Office of Financial Research, may8

require the submission of periodic and other re-9

ports from any nonbank financial company or10

bank holding company for the purpose of as-11

sessing the extent to which a financial activity12

or financial market in which the nonbank finan-13

cial company or bank holding company partici-14

pates, or the nonbank financial company or15

bank holding company itself, poses a threat to16

the financial stability of the United States.17

(B) MITIGATION OF REPORT BURDEN.18

Before requiring the submission of reports from19

any nonbank financial company or bank holding20

company that is regulated by a member agency21

or any primary financial regulatory agency, the22

Council, acting through the Office of Financial23

Research, shall coordinate with such agencies24

and shall, whenever possible, rely on informa-25


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tion available from the Office of Financial Re-1

search or such agencies.2

(4) BACK-UP EXAMINATION BY THE BOARD OF3

GOVERNORS.If the Council is unable to determine4

whether the financial activities of a nonbank finan-5

cial company pose a threat to the financial stability6

of the United States, based on information or re-7

ports obtained under paragraph (3), discussions with8

management, and publicly available information, the9

Council may request the Board of Governors, and10

the Board of Governors is authorized, to conduct an11

examination of the nonbank financial company for12

the sole purpose of determining whether the13

nonbank financial company should be supervised by14

the Board of Governors for purposes of this title.15

(5) CONFIDENTIALITY.16

(A) IN GENERAL.The Council, the Office17

of Financial Research, and the other member18

agencies shall maintain the confidentiality of19

any data, information, and reports submitted20

under this subsection and subtitle B.21

(B) RETENTION OF PRIVILEGE.The sub-22

mission of any nonpublicly available data or in-23

formation under this subsection and subtitle B24

shall not constitute a waiver of, or otherwise af-25


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fect, any privilege arising under Federal or1

State law (including the rules of any Federal or2

State court) to which the data or information is3

otherwise subject.4

(C) FREEDOM OF INFORMATION ACT.5

Section 552 of title 5, United States Code, in-6

cluding the exceptions thereunder, shall apply7

to any data or information submitted under this8

subsection and subtitle B.9

SEC. 113. AUTHORITY TO REQUIRE SUPERVISION AND REG-10

ULATION OF CERTAIN NONBANK FINANCIAL11

COMPANIES.12

(a) U.S. NONBANK FINANCIAL COMPANIES SUPER-13

VISED BY THE BOARD OF GOVERNORS.14

(1) DETERMINATION.The Council, on a non-15

delegable basis and by a vote of not fewer than 2316

of members then serving, including an affirmative17

vote by the Chairperson, may determine that a U.S.18

nonbank financial company shall be supervised by19

the Board of Governors and shall be subject to pru-20

dential standards, in accordance with this title, if21

the Council determines that material financial dis-22

tress at the U.S. nonbank financial company would23

pose a threat to the financial stability of the United24

States.25


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(2) CONSIDERATIONS.Each determination1

under paragraph (1) shall be based on a consider-2

ation by the Council of3

(A) the degree of leverage of the company;4

(B) the amount and nature of the financial5

assets of the company;6

(C) the amount and types of the liabilities7

of the company, including the degree of reliance8

on short-term funding;9

(D) the extent and type of the off-balance-10

sheet exposures of the company;11

(E) the extent and type of the transactions12

and relationships of the company with other13

significant nonbank financial companies and14

significant bank holding companies;15

(F) the importance of the company as a16

source of credit for households, businesses, and17

State and local governments and as a source of18

liquidity for the United States financial system;19

(G) the recommendation, if any, of a mem-20

ber of the Council;21

(H) the operation of, or ownership interest22

in, any clearing, settlement, or payment busi-23

ness of the company;24

(I) the extent to which25


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(i) assets are managed rather than1

owned by the company; and2

(ii) ownership of assets under man-3

agement is diffuse; and4

(J) any other factors that the Council5

deems appropriate.6

(b) FOREIGN NONBANK FINANCIAL COMPANIES SU-7

PERVISED BY THE BOARD OF GOVERNORS.8

(1) DETERMINATION.The Council, on a non-9

delegable basis and by a vote of not fewer than 2310

of members then serving, including an affirmative11

vote by the Chairperson, may determine that a for-12

eign nonbank financial company that has substantial13

assets or operations in the United States shall be su-14

pervised by the Board of Governors and shall be15

subject to prudential standards in accordance with16

this title, if the Council determines that material fi-17

nancial distress at the foreign nonbank financial18

company would pose a threat to the financial sta-19

bility of the United States.20

(2) CONSIDERATIONS.Each determination21

under paragraph (1) shall be based on a consider-22

ation by the Council of23

(A) the degree of leverage of the company;24


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(B) the amount and nature of the United1

States financial assets of the company;2

(C) the amount and types of the liabilities3

of the company used to fund activities and op-4

erations in the United States, including the de-5

gree of reliance on short-term funding;6

(D) the extent of the United States-related7

off-balance-sheet exposure of the company;8

(E) the extent and type of the transactions9

and relationships of the company with other10

significant nonbank financial companies and11

bank holding companies;12

(F) the importance of the company as a13

source of credit for United States households,14

businesses, and State and local governments,15

and as a source of liquidity for the United16

States financial system;17

(G) the recommendation, if any, of a mem-18

ber of the Council;19

(H) the extent to which20

(i) assets are managed rather than21

owned by the company; and22

(ii) ownership of assets under man-23

agement is diffuse; and24


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(I) any other factors that the Council1

deems appropriate.2

(c) REEVALUATION AND RESCISSION.The Council3

shall4

(1) not less frequently than annually, reevaluate5

each determination made under subsections (a) and6

(b) with respect to each nonbank financial company7

supervised by the Board of Governors; and8

(2) rescind any such determination, if the9

Council, by a vote of not fewer than 23 of members10

then serving, including an affirmative vote by the11

Chairperson, determines that the nonbank financial12

company no longer meets the standards under sub-13

section (a) or (b), as applicable.14

(d) NOTICE AND OPPORTUNITY FOR HEARING AND15

FINAL DETERMINATION.16

(1) IN GENERAL.The Council shall provide to17

a nonbank financial company written notice of a18

proposed determination of the Council, including an19

explanation of the basis of the proposed determina-20

tion of the Council, that such nonbank financial21

company shall be supervised by the Board of Gov-22

ernors and shall be subject to prudential standards23

in accordance with this title.24


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(2) HEARING.Not later than 30 days after1

the date of receipt of any notice of a proposed deter-2

mination under paragraph (1), the nonbank finan-3

cial company may request, in writing, an oppor-4

tunity for a written or oral hearing before the Coun-5

cil to contest the proposed determination. Upon re-6

ceipt of a timely request, the Council shall fix a time7

(not later than 30 days after the date of receipt of8

the request) and place at which such company may9

appear, personally or through counsel, to submit10

written materials (or, at the sole discretion of the11

Council, oral testimony and oral argument).12

(3) FINAL DETERMINATION.Not later than 6013

days after the date of a hearing under paragraph14

(2), the Council shall notify the nonbank financial15

company of the final determination of the Council,16

which shall contain a statement of the basis for the17

decision of the Council.18

(4) NO HEARING REQUESTED.If a nonbank19

financial company does not make a timely request20

for a hearing, the Council shall notify the nonbank21

financial company, in writing, of the final determina-22

tion of the Council under subsection (a) or (b), as23

applicable, not later than 10 days after the date by24


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than 15 days after the date of receipt of the request)1

and place at which the nonbank financial company2

may appear, personally or through counsel, to sub-3

mit written materials (or, at the sole discretion of4

the Council, oral testimony and oral argument).5

(4) NOTICE OF FINAL DETERMINATION.Not6

later than 30 days after the date of any hearing7

under paragraph (3), the Council shall notify the8

subject nonbank financial company of the final de-9

termination of the Council under this paragraph,10

which shall contain a statement of the basis for the11


(f) CONSULTATION.The Council shall consult with13

the primary financial regulatory agency, if any, for each14

nonbank financial company or subsidiary of a nonbank fi-15

nancial company that is being considered for supervision16

by the Board of Governors under this section before the17

Council makes any final determination with respect to18

such nonbank financial company under subsection (a), (b),19

or (c).20

(g) JUDICIAL REVIEW.If the Council makes a final21

determination under this section with respect to a22

nonbank financial company, such nonbank financial com-23

pany may, not later than 30 days after the date of receipt24

of the notice of final determination under subsection25


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(d)(3) or (e)(4), bring an action in the United States dis-1

trict court for the judicial district in which the home office2

of such nonbank financial company is located, or in the3

United States District Court for the District of Columbia,4

for an order requiring that the final determination be re-5

scinded, and the court shall, upon review, dismiss such ac-6

tion or direct the final determination to be rescinded. Re-7

view of such an action shall be limited to whether the final8

determination made under this section was arbitrary and9

capricious.10

SEC. 114. REGISTRATION OF NONBANK FINANCIAL COMPA-11

NIES SUPERVISED BY THE BOARD OF GOV-12

ERNORS.13

Not later than 180 days after the date of a final14

Council determination under section 113 that a nonbank15

financial company is to be supervised by the Board of Gov-16

ernors, such company shall register with the Board of17

Governors, on forms prescribed by the Board of Gov-18

ernors, which shall include such information as the Board19

of Governors, in consultation with the Council, may deem20

necessary or appropriate to carry out this title.21


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SEC. 115. ENHANCED SUPERVISION AND PRUDENTIAL1

STANDARDS FOR NONBANK FINANCIAL COM-2

PANIES SUPERVISED BY THE BOARD OF GOV-3

ERNORS AND CERTAIN BANK HOLDING COM-4

PANIES.5

(a) IN GENERAL.6

(1) PURPOSE.In order to prevent or mitigate7

risks to the financial stability of the United States8

that could arise from the material financial distress9

or failure of large, interconnected financial institu-10

tions, the Council may make recommendations to11

the Board of Governors concerning the establish-12

ment and refinement of prudential standards and re-13

porting and disclosure requirements applicable to14

nonbank financial companies supervised by the15

Board of Governors and large, interconnected bank16

holding companies, that17

(A) are more stringent than those applica-18

ble to other nonbank financial companies and19

bank holding companies that do not present20

similar risks to the financial stability of the21

United States; and22

(B) increase in stringency, based on the23

considerations identified in subsection (b)(3).24

(2) LIMITATION ON BANK HOLDING COMPA-25

NIES.Any standards recommended under sub-26


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sections (b) through (f) shall not apply to any bank1

holding company with total consolidated assets of2

less than $50,000,000,000. The Council may rec-3

ommend an asset threshold greater than4

$50,000,000,000 for the applicability of any par-5

ticular standard under those subsections.6

(b) DEVELOPMENT OF PRUDENTIAL STANDARDS.7

(1) IN GENERAL.The recommendations of the8

Council under subsection (a) may include9

(A) risk-based capital requirements;10

(B) leverage limits;11

(C) liquidity requirements;12

(D) resolution plan and credit exposure re-13

port requirements;14

(E) concentration limits;15

(F) a contingent capital requirement;16

(G) enhanced public disclosures; and17

(H) overall risk management requirements.18

(2) PRUDENTIAL STANDARDS FOR FOREIGN FI-19

NANCIAL COMPANIES.In making recommendations20

concerning the standards set forth in paragraph (1)21

that would apply to foreign nonbank financial com-22

panies supervised by the Board of Governors or for-23

eign-based bank holding companies, the Council24


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shall give due regard to the principle of national1

treatment and competitive equity.2

(3) CONSIDERATIONS.In making rec-3

ommendations concerning prudential standards4

under paragraph (1), the Council shall5

(A) take into account differences among6


Board of Governors and bank holding compa-8

nies described in subsection (a), based on9

(i) the factors described in subsections10

(a) and (b) of section 113;11

(ii) whether the company owns an in-12

sured depository institution;13

(iii) nonfinancial activities and affili-14

ations of the company; and15

(iv) any other factors that the Council16

determines appropriate; and17

(B) to the extent possible, ensure that18

small changes in the factors listed in sub-19

sections (a) and (b) of section 113 would not20

result in sharp, discontinuous changes in the21

prudential standards established under para-22

graph (1).23

(c) CONTINGENT CAPITAL.24


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

duct a study of the feasibility, benefits, costs, and2

structure of a contingent capital requirement for3


Board of Governors and bank holding companies de-5

scribed in subsection (a), which study shall in-6

clude7

(A) an evaluation of the degree to which8

such requirement would enhance the safety and9

soundness of companies subject to the require-10

ment, promote the financial stability of the11

United States, and reduce risks to United12

States taxpayers;13

(B) an evaluation of the characteristics14

and amounts of convertible debt that should be15

required;16

(C) an analysis of potential prudential17

standards that should be used to determine18

whether the contingent capital of a company19

would be converted to equity in times of finan-20

cial stress;21

(D) an evaluation of the costs to compa-22

nies, the effects on the structure and operation23

of credit and other financial markets, and other24

economic effects of requiring contingent capital;25


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(E) an evaluation of the effects of such re-1

quirement on the international competitiveness2

of companies subject to the requirement and3

the prospects for international coordination in4

establishing such requirement; and5

(F) recommendations for implementing6

regulations.7

(2) REPORT.The Council shall submit a re-8

port to Congress regarding the study required by9

paragraph (1) not later than 2 years after the date10

of enactment of this Act.11

(3) RECOMMENDATIONS TO CONGRESS.12

(A) IN GENERAL.Subsequent to submit-13

ting a report to Congress under paragraph (2),14

the Council may make recommendations to the15

Board of Governors to require any nonbank fi-16

nancial company supervised by the Board of17

Governors and any bank holding company de-18

scribed in subsection (a) to maintain a min-19

imum amount of long-term hybrid debt that is20

convertible to equity in times of financial stress.21

(B) F ACTORS TO CONSIDER.In making22

recommendations under this subsection, the23

Council shall consider24


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(2) CREDIT EXPOSURE REPORT.The Council1

may make recommendations to the Board of Gov-2

ernors concerning the advisability of requiring each3

nonbank financial company supervised by the Board4

of Governors and bank holding company described in5

subsection (a) to report periodically to the Council,6

the Board of Governors, and the Corporation on7

(A) the nature and extent to which the8

company has credit exposure to other signifi-9

cant nonbank financial companies and signifi-10

cant bank holding companies; and11

(B) the nature and extent to which other12

such significant nonbank financial companies13

and significant bank holding companies have14

credit exposure to that company.15

(e) CONCENTRATION LIMITS.In order to limit the16

risks that the failure of any individual company could pose17

to nonbank financial companies supervised by the Board18

of Governors or bank holding companies described in sub-19

section (a), the Council may make recommendations to the20

Board of Governors to prescribe standards to limit such21

risks, as set forth in section 165.22

(f) ENHANCED PUBLIC DISCLOSURES.The Council23

may make recommendations to the Board of Governors24

to require periodic public disclosures by bank holding com-25


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48/1332

48


Office of Financial Research, shall, to the fullest ex-1

tent possible, use2

(A) reports that a bank holding company,3

nonbank financial company supervised by the4

Board of Governors, or any functionally regu-5

lated subsidiary of such company has been re-6

quired to provide to other Federal or State reg-7

ulatory agencies;8

(B) information that is otherwise required9

to be reported publicly; and10

(C) externally audited financial statements.11

(2) AVAILABILITY.Each bank holding com-12

pany described in subsection (a) and nonbank finan-13

cial company supervised by the Board of Governors,14

and any subsidiary thereof, shall provide to the15

Council, at the request of the Council, copies of all16

reports referred to in paragraph (1).17

(3) CONFIDENTIALITY.The Council shall18

maintain the confidentiality of the reports obtained19

under subsection (a) and paragraph (1)(A) of this20

subsection.21

SEC. 117. TREATMENT OF CERTAIN COMPANIES THAT22

CEASE TO BE BANK HOLDING COMPANIES.23

(a) APPLICABILITY.This section shall apply to any24

entity or a successor entity that25


49/1332

49


(1) was a bank holding company having total1

consolidated assets equal to or greater than2

$50,000,000,000 as of January 1, 2010; and3

(2) received financial assistance under or par-4

ticipated in the Capital Purchase Program estab-5

lished under the Troubled Asset Relief Program au-6

thorized by the Emergency Economic Stabilization7

Act of 2008.8

(b) TREATMENT.If an entity described in sub-9

section (a) ceases to be a bank holding company at any10

time after January 1, 2010, then such entity shall be11

treated as a nonbank financial company supervised by the12

Board of Governors, as if the Council had made a deter-13

mination under section 113 with respect to that entity.14

(c) APPEAL.15

(1) REQUEST FOR HEARING.An entity may16

request, in writing, an opportunity for a written or17

oral hearing before the Council to appeal its treat-18

ment as a nonbank financial company supervised by19

the Board of Governors in accordance with this sec-20

tion. Upon receipt of the request, the Council shall21

fix a time (not later than 30 days after the date of22

receipt of the request) and place at which such enti-23

ty may appear, personally or through counsel, to24


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submit written materials (or, at the sole discretion1

of the Council, oral testimony and oral argument).2

(2) DECISION.3

(A) PROPOSED DECISION.Not later than4

60 days after the date of a hearing under para-5

graph (1), the Council shall submit a report to,6

and may testify before, the Committee on7

Banking, Housing, and Urban Affairs of the8

Senate and the Committee on Financial Serv-9

ices of the House of Representatives on the pro-10

posed decision of the Council regarding an ap-11

peal under paragraph (1), which report shall in-12

clude a statement of the basis for the proposed13


(B) NOTICE OF FINAL DECISION.The15

Council shall notify the subject entity of the16

final decision of the Council regarding an ap-17

peal under paragraph (1), which notice shall18

contain a statement of the basis for the final19

decision of the Council, not later than 60 days20

after the later of21

(i) the date of the submission of the22

report under subparagraph (A); or23

(ii) if the Committee on Banking,24

Housing, and Urban Affairs of the Senate25


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or the Committee on Financial Services of1

the House of Representatives hold one or2

more hearings regarding such report, the3

date of the last such hearing.4

(C) CONSIDERATIONS.In making a deci-5

sion regarding an appeal under paragraph (1),6

the Council shall consider whether the company7

meets the standards under section 113(a) or8

113(b), as applicable, and the definition of the9

term nonbank financial company under sec-10

tion 102. The decision of the Council shall be11

final, subject to the review under paragraph12

(3).13

(3) REVIEW.If the Council denies an appeal14

under this subsection, the Council shall, not less fre-15

quently than annually, review and reevaluate the de-16

cision.17

SEC. 118. COUNCIL FUNDING.18

Any expenses of the Council shall be treated as ex-19

penses of, and paid by, the Office of Financial Research.20

SEC. 119. RESOLUTION OF SUPERVISORY JURISDICTIONAL21

DISPUTES AMONG MEMBER AGENCIES.22

(a) REQUEST FOR DISPUTE RESOLUTION.The23

Council shall resolve a dispute among 2 or more member24

agencies, if25


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

other member agency about the respective jurisdic-2

tion over a particular bank holding company,3

nonbank financial company, or financial activity or4

product (excluding matters for which another dis-5

pute mechanism specifically has been provided under6

Federal law);7

(2) the Council determines that the disputing8

agencies cannot, after a demonstrated good faith ef-9

fort, resolve the dispute without the intervention of10

the Council; and11

(3) any of the member agencies involved in the12

dispute13

(A) provides all other disputants prior no-14

tice of the intent to request dispute resolution15

by the Council; and16

(B) requests in writing, not earlier than 1417

days after providing the notice described in sub-18

paragraph (A), that the Council resolve the dis-19

pute.20

(b) COUNCIL DECISION.The Council shall resolve21

each dispute described in subsection (a)22

(1) within a reasonable time after receiving the23

dispute resolution request;24


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(2) after consideration of relevant information1

provided by each agency party to the dispute; and2

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

ing the entirety of the matter, or by determining a4

compromise position.5

(c) FORM AND BINDING EFFECT.A Council deci-6

sion under this section shall7

(1) be in writing;8

(2) include an explanation of the reasons there-9

for; and10

(3) be binding on all Federal agencies that are11

parties to the dispute.12

SEC. 120. ADDITIONAL STANDARDS APPLICABLE TO ACTIVI-13

TIES OR PRACTICES FOR FINANCIAL STA-14

BILITY PURPOSES.15

(a) IN GENERAL.The Council may issue rec-16

ommendations to the primary financial regulatory agen-17

cies to apply new or heightened standards and safeguards,18

including standards enumerated in section 115, for a fi-19

nancial activity or practice conducted by bank holding20

companies or nonbank financial companies under their re-21

spective jurisdictions, if the Council determines that the22

conduct of such activity or practice could create or in-23

crease the risk of significant liquidity, credit, or other24

problems spreading among bank holding companies and25


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nonbank financial companies or the financial markets of1

the United States.2

(b) PROCEDURE FOR RECOMMENDATIONS TO REGU-3

LATORS.4

(1) NOTICE AND OPPORTUNITY FOR COM-5

MENT.6

(A) IN GENERAL.The Council shall con-7

sult with the primary financial regulatory agen-8

cies and provide notice to the public and oppor-9

tunity for comment for any proposed rec-10

ommendation that the primary financial regu-11

latory agencies apply new or heightened stand-12

ards and safeguards for a financial activity or13

practice.14

(2) CRITERIA.The new or heightened stand-15

ards and safeguards for a financial activity or prac-16

tice recommended under paragraph (1)17

(A) shall take costs to long-term economic18

growth into account; and19

(B) may include prescribing the conduct of20

the activity or practice in specific ways (such as21

by limiting its scope, or applying particular cap-22

ital or risk-management requirements to the23

conduct of the activity) or prohibiting the activ-24

ity or practice.25


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(c) IMPLEMENTATION OF RECOMMENDED STAND-1

ARDS.2

(1) ROLE OF PRIMARY FINANCIAL REGULATORY3

AGENCY.4

(A) IN GENERAL.Each primary financial5

regulatory agency may impose, require reports6

regarding, examine for compliance with, and en-7

force standards in accordance with this section8

with respect to those entities for which it is the9

primary financial regulatory agency.10

(B) RULE OF CONSTRUCTION.The au-11

thority under this paragraph is in addition to,12

and does not limit, any other authority of a pri-13

mary financial regulatory agency. Compliance14

by an entity with actions taken by a primary fi-15

nancial regulatory agency under this section16

shall be enforceable in accordance with the stat-17

utes governing the respective jurisdiction of the18

primary financial regulatory agency over the en-19

tity, as if the agency action were taken under20

those statutes.21

(2) IMPOSITION OF STANDARDS.The primary22

financial regulatory agency shall impose the stand-23

ards recommended by the Council in accordance24

with subsection (a), or similar standards that the25


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Council deems acceptable, or shall explain in writing1

to the Council, not later than 90 days after the date2

on which the Council issues the recommendation,3

why the agency has determined not to follow the rec-4

ommendation of the Council.5

(d) REPORT TO CONGRESS.The Council shall re-6

port to Congress on7

(1) any recommendations issued by the Council8

under this section;9

(2) the implementation or failure to implement10

such recommendation on the part of a primary fi-11

nancial regulatory agency; and12

(3) in any case in which no primary financial13

regulatory agency exists for the nonbank financial14

company conducting financial activities or practices15

referred to in subsection (a), recommendations for16

legislation that would prevent such activities or prac-17

tices from threatening the stability of the financial18

system of the United States.19

(e) EFFECT OF RESCISSION OF IDENTIFICATION.20

(1) NOTICE.The Council may recommend to21

the relevant primary financial regulatory agency that22

a financial activity or practice no longer requires any23

standards or safeguards implemented under this sec-24

tion.25


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(2) DETERMINATION OF PRIMARY FINANCIAL1

REGULATORY AGENCY TO CONTINUE.Upon receipt2

of a recommendation under paragraph (1), a pri-3

mary financial regulatory agency that has imposed4

standards under this section shall determine whether5

standards that it has imposed under this title should6

remain in effect.7

SEC. 121. MITIGATION OF RISKS TO FINANCIAL STABILITY.8

(a) MITIGATORY ACTIONS.If the Board of Gov-9

ernors determines that a bank holding company with total10

consolidated assets of $50,000,000,000 or more, or a11

nonbank financial company supervised by the Board of12

Governors, poses a grave threat to the financial stability13

of the United States, the Board of Governors, upon an14

affirmative vote of not fewer than 23 of the Council mem-15

bers then serving, shall require the subject company16

(1) to terminate one or more activities;17

(2) to impose conditions on the manner in18

which the company conducts one or more activities;19

or20

(3) if the Board of Governors determines that21

such action is inadequate to mitigate a threat to the22

financial stability of the United States in its rec-23

ommendation, sell or otherwise transfer assets or24

off-balance-sheet items to unaffiliated entities.25


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(b) NOTICE AND HEARING.1

(1) IN GENERAL.The Board of Governors, in2

consultation with the Council, shall provide to a3

company described in subsection (a) written notice4

that such company is being considered for mitiga-5

tory action pursuant to this section, including an ex-6

planation of the basis for, and description of, the7

proposed mitigatory action.8

(2) HEARING.Not later than 30 days after9

the date of receipt of notice under paragraph (1),10

the company may request, in writing, an opportunity11

for a written or oral hearing before the Board of12

Governors to contest the proposed mitigatory action.13

Upon receipt of a timely request, the Board of Gov-14

ernors shall fix a time (not later than 30 days after15

the date of receipt of the request) and place at16

which such company may appear, personally or17

through counsel, to submit written materials (or, at18

the discretion of the Board of Governors, in con-19

sultation with the Council, oral testimony and oral20

argument).21

(3) DECISION.Not later than 60 days after22

the date of a hearing under paragraph (2), or not23

later than 60 days after the provision of a notice24

under paragraph (1) if no hearing was held, the25


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Board of Governors shall notify the company of the1

final decision of the Board of Governors, including2

the results of the vote of the Council, as described3

in subsection (a).4

(c) F ACTORS FOR CONSIDERATION.The Board of5

Governors and the Council shall take into consideration6

the factors set forth in subsection (a) or (b) of section7

113, as applicable, in a determination described in sub-8

section (a) and in a decision described in subsection (b).9

(d) APPLICATION TO FOREIGN FINANCIAL COMPA-10

NIES.The Board of Governors may prescribe regulations11

regarding the application of this section to foreign12

nonbank financial companies supervised by the Board of13

Governors and foreign-based bank holding companies, giv-14

ing due regard to the principle of national treatment and15

competitive equity.16

Subtitle BOffice of Financial17

Research18


For purposes of this subtitle20

(1) the terms Office and Director mean21

the Office of Financial Research established under22

this subtitle and the Director thereof, respectively;23


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(2) the term financial company has the same1

meaning as in title II, and includes an insured de-2

pository institution and an insurance company;3

(3) the term Data Center means the data4

center established under section 154; and5

(4) the term Research and Analysis Center6

means the research and analysis center established7

under section 154.8

SEC. 152. OFFICE OF FINANCIAL RESEARCH ESTABLISHED.9

(a) ESTABLISHMENT.There is established within10

the Department of the Treasury the Office of Financial11

Research.12

(b) DIRECTOR.13

(1) IN GENERAL.The Office shall be headed14

by a Director, who shall be appointed by the Presi-15

dent, by and with the advice and consent of the Sen-16

ate.17

(2) TERM OF SERVICE.The Director shall18

serve for a term of 6 years, except that, in the event19

that a successor is not nominated and confirmed by20

the end of the term of service of a Director, the Di-21

rector may continue to serve until such time as the22

next Director is appointed and confirmed.23

(3) E XECUTIVE LEVEL.The Director shall be24

compensated at level III of the Executive Schedule.25


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(4) PROHIBITION ON DUAL SERVICE.The in-1

dividual serving in the position of Director may not,2

during such service, also serve as the head of any fi-3

nancial regulatory agency.4

(5) RESPONSIBILITIES, DUTIES AND AUTHOR-5

ITY.The Director shall have sole discretion in the6

manner in which the Director fulfills the responsibil-7

ities and duties and exercise the authorities de-8

scribed in this subtitle.9

(c) BUDGET.The Director, in consultation with the10

Chairperson, shall establish the annual budget of the Of-11

fice.12

(d) OFFICE PERSONNEL.13

(1) IN GENERAL.The Director, in consulta-14

tion with the Chairperson, may fix the number of,15

and appoint and direct, all employees of the Office.16

(2) COMPENSATION.The Director, in con-17

sultation with the Chairperson, shall fix, adjust, and18

administer the pay for all employees of the Office,19

without regard to chapter 51 or subchapter III of20

chapter 53 of title 5, United States Code, relating21

to classification of positions and General Schedule22

pay rates.23

(3) COMPARABILITY.Section 1206(a) of the24

Financial Institutions Reform, Recovery, and En-25


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forcement Act of 1989 (12 U.S.C. 1833b(a)) is1

amended2

(A) by striking Finance Board,, and in-3

serting Finance Board, the Office of Financial4

Research, and the Bureau of Consumer Finan-5

cial Protection; and6

(B) by striking and the Office of Thrift7

Supervision,.8

(e) ASSISTANCE FROM FEDERAL AGENCIES.Any9

department or agency of the United States may provide10

to the Office and any special advisory, technical, or profes-11

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Chairman Chris Dodd's Financial Reform Legislation Bill

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