S. 3217 (111th): Restoring American Financial Stability Act of 2010

111th Congress, 2009–2010. Text as of Apr 29, 2010 (Amendment).

Status & Summary | PDF | Source: GPO

Calendar No. 349

AMENDMENT NO. 3739

In the nature of a substitute.

IN THE SENATE OF THE UNITED STATES

111th Cong.

2d Sess.

S. 3217

To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end too big to fail, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.

April 29, 2010

Ordered to be printed

Proposed by for ( (for himself and Mrs. Lincoln))

Strike all after the enacting clause and insert the following:

1.

Short title; table of contents

(a)

Short title

This Act may be cited as the Restoring American Financial Stability Act of 2010.

(b)

Table of Contents

The table of contents for this Act is as follows:


Sec. 1. Short title; table of contents.

Sec. 2. Definitions.

Sec. 3. Severability.

Sec. 4. Effective date.

TITLE I—Financial Stability

Sec. 101. Short title.

Sec. 102. Definitions.

Subtitle A—Financial Stability Oversight Council

Sec. 111. Financial Stability Oversight Council established.

Sec. 112. Council authority.

Sec. 113. Authority to require supervision and regulation of certain nonbank financial companies.

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

Sec. 115. Enhanced supervision and prudential standards for nonbank financial companies supervised by the Board of Governors and certain bank holding companies.

Sec. 116. Reports.

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

Sec. 118. Council funding.

Sec. 119. Resolution of supervisory jurisdictional disputes among member agencies.

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

Sec. 121. Mitigation of risks to financial stability.

Subtitle B—Office of Financial Research

Sec. 151. Definitions.

Sec. 152. Office of Financial Research established.

Sec. 153. Purpose and duties of the Office.

Sec. 154. Organizational structure; responsibilities of primary programmatic units.

Sec. 155. Funding.

Sec. 156. Transition oversight.

Subtitle C—Additional Board of Governors authority for certain nonbank financial companies and bank holding companies

Sec. 161. Reports by and examinations of nonbank financial companies supervised 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.

TITLE II—Orderly liquidation authority

Sec. 201. Definitions.

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 III—Transfer of powers to the Comptroller of the Currency, the Corporation, and the Board of Governors

Sec. 300. Short title.

Sec. 301. Purposes.

Sec. 302. Definition.

Subtitle A—Transfer of powers and duties

Sec. 311. Transfer date.

Sec. 312. Powers and duties transferred.

Sec. 313. Abolishment.

Sec. 314. Amendments to the Revised Statutes.

Sec. 315. Federal information policy.

Sec. 316. Savings provisions.

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

Sec. 318. Funding.

Sec. 319. Contracting and leasing authority.

Subtitle B—Transitional provisions

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

Sec. 322. Transfer of employees.

Sec. 323. Property transferred.

Sec. 324. Funds transferred.

Sec. 325. Disposition of affairs.

Sec. 326. Continuation of services.

Subtitle C—Federal Deposit Insurance Corporation

Sec. 331. Deposit insurance reforms.

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

Subtitle D—Termination of Federal Thrift Charter

Sec. 341. Termination of Federal savings associations.

Sec. 342. Branching.

TITLE IV—Regulation of advisers to hedge funds and others

Sec. 401. Short title.

Sec. 402. Definitions.

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

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

Sec. 405. Disclosure provision 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 registration 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 V—Insurance

Subtitle A—Office of National Insurance

Sec. 501. Short title.

Sec. 502. Establishment of Office of National Insurance.

Subtitle B—State-based Insurance Reform

Sec. 511. Short title.

Sec. 512. Effective date.

PART I—Nonadmitted insurance

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

Sec. 522. Regulation of nonadmitted insurance by insured’s home State.

Sec. 523. Participation in national producer database.

Sec. 524. Uniform standards for surplus lines eligibility.

Sec. 525. Streamlined application for commercial purchasers.

Sec. 526. GAO study of nonadmitted insurance market.

Sec. 527. Definitions.

PART II—Reinsurance

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

Sec. 532. Regulation of reinsurer solvency.

Sec. 533. Definitions.

PART III—Rule of construction

Sec. 541. Rule of construction.

Sec. 542. Severability.

TITLE VI—Improvements to regulation of bank and savings association holding companies and depository institutions

Sec. 601. Short title.

Sec. 602. Definition.

Sec. 603. Moratorium and study on treatment of credit card banks, industrial loan companies, and certain other companies under the Bank Holding Company Act of 1956.

Sec. 604. Reports and examinations of holding companies; regulation of functionally regulated subsidiaries.

Sec. 605. Assuring consistent oversight of permissible activities of depository institution subsidiaries of holding companies.

Sec. 606. Requirements for financial holding companies to remain well capitalized and well managed.

Sec. 607. Standards for interstate acquisitions.

Sec. 608. Enhancing existing restrictions on bank transactions with affiliates.

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

Sec. 610. Lending limits applicable to credit exposure on derivative transactions, repurchase agreements, reverse repurchase agreements, and securities lending and borrowing transactions.

Sec. 611. 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 VII—Wall Street Transparency and Accountability

Sec. 701. Short title.

Subtitle A—Regulation of Over-the-Counter Swaps Markets

PART I—Regulatory authority

Sec. 711. Definitions.

Sec. 712. Review of regulatory authority.

Sec. 713. 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 approval – CFTC-SEC process.

Sec. 718. Determining status of novel derivative products.

PART II—Regulation of Swap Markets

Sec. 721. Definitions.

Sec. 722. Jurisdiction.

Sec. 723. Clearing.

Sec. 724. Swaps; segregation and bankruptcy treatment.

Sec. 725. Derivatives clearing organizations.

Sec. 726. Rulemaking on conflict of interest.

Sec. 727. Public reporting of swap transaction data.

Sec. 728. Swap data repositories.

Sec. 729. Reporting and recordkeeping.

Sec. 730. Large swap trader reporting.

Sec. 731. Registration and regulation of swap dealers and major swap participants.

Sec. 732. Conflicts of interest.

Sec. 733. Swap execution facilities.

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

Sec. 735. Designated contract markets.

Sec. 736. Margin.

Sec. 737. Position limits.

Sec. 738. Foreign boards of trade.

Sec. 739. Legal certainty for swaps.

Sec. 740. Multilateral clearing organizations.

Sec. 741. Enforcement.

Sec. 742. Retail commodity transactions.

Sec. 743. Other authority.

Sec. 744. Restitution remedies.

Sec. 745. Enhanced compliance by registered entities.

Sec. 746. Insider trading.

Sec. 747. Antidisruptive practices authority.

Sec. 748. Commodity whistleblower incentives and protection.

Sec. 749. Conforming amendments.

Sec. 750. Study on oversight of carbon markets.

Sec. 751. Energy and Environmental Markets Advisory Committee.

Sec. 752. International harmonization.

Sec. 753. Effective date.

Subtitle B—Regulation of Security-Based Swap Markets

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

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

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

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

Sec. 765. Rulemaking on conflict of interest.

Sec. 766. Reporting and recordkeeping.

Sec. 767. State gaming and bucket shop laws.

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

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

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

Sec. 771. Other authority.

Sec. 772. Jurisdiction.

Sec. 773. Effective date.

TITLE VIII—Payment, clearing, and settlement supervision

Sec. 801. Short title.

Sec. 802. Findings and purposes.

Sec. 803. Definitions.

Sec. 804. Designation of systemic importance.

Sec. 805. Standards for systemically important financial market utilities and payment, clearing, or settlement activities.

Sec. 806. Operations of designated financial market utilities.

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

Sec. 808. Examination of and enforcement actions against financial institutions subject to standards for designated activities.

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

Sec. 810. Rulemaking.

Sec. 811. Other authority.

Sec. 812. Effective date.

TITLE IX—Investor protections and improvements to the regulation of securities

Subtitle A—Increasing investor protection

Sec. 911. Investor Advisory Committee established.

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

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

Sec. 914. Office of the Investor Advocate.

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

Sec. 916. Study regarding financial literacy among investors.

Sec. 917. Study regarding mutual fund advertising.

Sec. 918. Clarification of Commission authority to require investor disclosures before purchase of investment products and services.

Sec. 919. Study on conflicts of interest.

Sec. 919A. Study on improved investor access to information on investment advisers and broker-dealers.

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

Subtitle B—Increasing regulatory enforcement and remedies

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

Sec. 922. Whistleblower protection.

Sec. 923. Conforming amendments for whistleblower protection.

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

Sec. 925. Collateral bars.

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

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

Sec. 928. Clarification that Section 205 of the Investment Advisers Act of 1940 does not apply to State-registered advisers.

Sec. 929. Unlawful margin lending.

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

Sec. 929B. FAIR Fund amendments.

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

Subtitle C—Improvements 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 organization 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 independent professional analyst organization.

Subtitle D—Improvements to the Asset-Backed Securitization Process

Sec. 941. Regulation of credit risk retention.

Sec. 942. Disclosures and reporting for asset-backed securities.

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

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

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

Subtitle E—Accountability and Executive Compensation

Sec. 951. Shareholder vote on executive compensation disclosures.

Sec. 952. Compensation committee independence.

Sec. 953. Executive compensation disclosures.

Sec. 954. Recovery of erroneously awarded compensation.

Sec. 955. Disclosure regarding employee and director hedging.

Sec. 956. Excessive compensation by holding companies of depository institutions.

Sec. 957. Voting by brokers.

Subtitle F—Improvements to the Management of the Securities and Exchange Commission

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

Sec. 962. Triennial report on personnel management.

Sec. 963. Annual financial controls audit.

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

Sec. 965. Compliance examiners.

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

Subtitle G—Strengthening 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 H—Municipal Securities

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

Sec. 976. Government Accountability Office study of increased disclosure to investors.

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

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

Sec. 979. Commission Office of Municipal Securities.

Subtitle I—Public Company Accounting Oversight Board, portfolio margining, and other matters

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

Sec. 982. Oversight of brokers and dealers.

Sec. 983. Portfolio margining.

Sec. 984. Loan or borrowing of securities.

Sec. 985. Technical corrections to Federal securities laws.

Sec. 986. Conforming amendments relating to repeal of the Public Utility Holding Company Act of 1935.

Sec. 987. Amendment to definition of material loss and nonmaterial losses to the Deposit Insurance Fund for purposes of Inspector General reviews.

Sec. 988. Amendment to definition of material loss and nonmaterial losses to the National Credit Union Share Insurance Fund for purposes of Inspector General reviews.

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

Sec. 989A. Senior investor protections.

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

Subtitle J—Self-funding of the Securities and Exchange Commission

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

TITLE X—Bureau of Consumer Financial Protection

Sec. 1001. Short title.

Sec. 1002. Definitions.

Subtitle A—Bureau of Consumer Financial Protection

Sec. 1011. Establishment of the Bureau.

Sec. 1012. Executive and administrative powers.

Sec. 1013. Administration.

Sec. 1014. Consumer Advisory Board.

Sec. 1015. Coordination.

Sec. 1016. Appearances before and reports to Congress.

Sec. 1017. Funding; penalties and fines.

Sec. 1018. Effective date.

Subtitle B—General Powers of the Bureau

Sec. 1021. Purpose, objectives, and functions.

Sec. 1022. Rulemaking authority.

Sec. 1023. Review of Bureau regulations.

Sec. 1024. Supervision of nondepository covered persons.

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

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

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

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

Sec. 1029. Effective date.

Subtitle C—Specific Bureau Authorities

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

Sec. 1032. Disclosures.

Sec. 1033. Consumer rights to access information.

Sec. 1034. Response to consumer complaints and inquiries.

Sec. 1035. Private education loan ombudsman.

Sec. 1036. Prohibited acts.

Sec. 1037. Effective date.

Subtitle D—Preservation of State Law

Sec. 1041. Relation to State law.

Sec. 1042. Preservation of enforcement powers of States.

Sec. 1043. Preservation of existing contracts.

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

Sec. 1045. Clarification of law applicable to nondepository institution subsidiaries.

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

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

Sec. 1048. Effective date.

Subtitle E—Enforcement Powers

Sec. 1051. Definitions.

Sec. 1052. Investigations and administrative discovery.

Sec. 1053. Hearings and adjudication proceedings.

Sec. 1054. Litigation authority.

Sec. 1055. Relief available.

Sec. 1056. Referrals for criminal proceedings.

Sec. 1057. Employee protection.

Sec. 1058. Effective date.

Subtitle F—Transfer of Functions and Personnel; Transitional Provisions

Sec. 1061. Transfer of consumer financial protection functions.

Sec. 1062. Designated transfer date.

Sec. 1063. Savings provisions.

Sec. 1064. Transfer of certain personnel.

Sec. 1065. Incidental transfers.

Sec. 1066. Interim authority of the Secretary.

Sec. 1067. Transition oversight.

Subtitle G—Regulatory Improvements

Sec. 1071. Collection of deposit account data.

Sec. 1072. Small business data collection.

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

Sec. 1074. Prohibition on certain prepayment penalties.

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

Sec. 1076. Remittance transfers.

Subtitle H—Conforming Amendments

Sec. 1081. Amendments to the Inspector General Act.

Sec. 1082. Amendments to the Privacy Act of 1974.

Sec. 1083. Amendments to the Alternative Mortgage Transaction Parity Act of 1982.

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

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

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

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

Sec. 1088. Amendments to the Fair Credit Reporting Act and the Fair and Accurate Credit Transactions Act.

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 Licensing 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. Effective date.

TITLE XI—Federal 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.

TITLE XII—Improving access to mainstream financial institutions

Sec. 1201. Short title.

Sec. 1202. Purpose.

Sec. 1203. Definitions.

Sec. 1204. Expanded access to mainstream financial institutions.

Sec. 1205. Low-cost alternatives to payday loans.

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

Sec. 1207. Procedural provisions.

Sec. 1208. Authorization of appropriations.

Sec. 1209. Regulations.

Sec. 1210. Evaluation and reports to Congress.

2.

Definitions

As used in this Act, the following definitions shall apply, except as the context otherwise requires or as otherwise specifically provided in this Act:

(1)

Affiliate

The term affiliate means any company that controls, is controlled by, or is under common control with another company.

(2)

Appropriate Federal banking agency

On and after the transfer date, the term appropriate Federal banking agency has the same meaning as in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), as amended by title III.

(3)

Board of governors

The term Board of Governors means the Board of Governors of the Federal Reserve System.

(4)

Bureau

The term Bureau means the Bureau of Consumer Financial Protection established under title X.

(5)

Commission

The term Commission means the Securities and Exchange Commission, except in the context of the Commodity Futures Trading Commission.

(6)

Corporation

The term Corporation means the Federal Deposit Insurance Corporation.

(7)

Council

The term Council means the Financial Stability Oversight Council established under title I.

(8)

Credit union

The term credit union means a Federal credit union, State credit union, or State-chartered credit union, as those terms are defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752).

(9)

Federal banking agency

The term—

(A)

Federal banking agency means, individually, the Board of Governors, the Office of the Comptroller of the Currency, and the Corporation; and

(B)

Federal banking agencies means all of the agencies referred to in subparagraph (A), collectively.

(10)

Functionally regulated subsidiary

The term functionally regulated subsidiary has the same meaning as in section 5(c)(5) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(5)).

(11)

Primary financial regulatory agency

The term primary financial regulatory agency means—

(A)

the appropriate Federal banking agency, with respect to institutions described in section 3(q) of the Federal Deposit Insurance Act, except to the extent that an institution is or the activities of an institution are otherwise subject to the jurisdiction of an agency listed in subparagraph (B), (C), (D), or (E);

(B)

the Securities and Exchange Commission, with respect to—

(i)

any broker or dealer that is registered with the Commission under the Securities Exchange Act of 1934;

(ii)

any investment company that is registered with the Commission under the Investment Company Act of 1940;

(iii)

any investment adviser that is registered with the Commission under the Investment Advisers Act of 1940, with respect to the investment advisory activities of such company and activities that are incidental to such advisory activities; and

(iv)

any clearing agency registered with the Commission under the Securities Exchange Act of 1934;

(C)

the Commodity Futures Trading Commission, with respect to any futures commission merchant, any commodity trading adviser, and any commodity pool operator registered with the Commodity Futures Trading Commission under the Commodity Exchange Act, with respect to the commodities activities of such entity and activities that are incidental to such commodities activities;

(D)

the State insurance authority of the State in which an insurance company is domiciled, with respect to the insurance activities and activities that are incidental to such insurance activities of an insurance company that is subject to supervision by the State insurance authority under State insurance law; and

(E)

the Federal Housing Finance Agency, with respect to Federal Home Loan Banks or the Federal Home Loan Bank System, and with respect to the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation.

(12)

Prudential standards

The term prudential standards means enhanced supervision and regulatory standards developed by the Board of Governors under section 115 or 165.

(13)

Secretary

The term Secretary means the Secretary of the Treasury.

(14)

Securities terms

The—

(A)

terms broker, dealer, issuer, nationally recognized statistical ratings organization, security, and securities laws have the same meanings as in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c);

(B)

term investment adviser has the same meaning as in section 202 of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2); and

(C)

term investment company has the same meaning as in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3).

(15)

State

The term State means any State, commonwealth, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, or the United States Virgin Islands.

(16)

Transfer date

The term transfer date means the date established under section 311.

(17)

Other incorporated definitions

(A)

Federal Deposit insurance act

The terms affiliate, bank, bank holding company, control (when used with respect to a depository institution), deposit, depository institution, Federal depository institution, Federal savings association, foreign bank, including, insured branch, insured depository institution, national member bank, national nonmember bank, savings association, State bank, State depository institution, State member bank, State nonmember bank, State savings association, and subsidiary have the same meanings as in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).

(B)

Holding Companies

The term—

(i)

bank holding company has the same meaning as in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841);

(ii)

financial holding company has the same meaning as in section 2(p) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(p)); and

(iii)

savings and loan holding company has the same meaning as in section 10 of the Home Owners' Loan Act (12 U.S.C. 1467a(a)).

3.

Severability

If any provision of this Act, an amendment made by this Act, or the application of such provision or amendment to any person or circumstance is held to be unconstitutional, the remainder of this Act, the amendments made by this Act, and the application of the provisions of such to any person or circumstance shall not be affected thereby.

4.

Effective date

Except as otherwise specifically provided in this Act or the amendments made by this Act, this Act and such amendments shall take effect 1 day after the date of enactment of this Act.

I

Financial Stability

101.

Short title

This title may be cited as the Financial Stability Act of 2010.

102.

Definitions

(a)

In general

For purposes of this title, unless the context otherwise requires, the following definitions shall apply:

(1)

Bank holding company

The term bank holding company has the same meaning as in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841). A foreign bank or company that is treated as a bank holding company for purposes of the Bank Holding Company Act of 1956, pursuant to section 8(a) of the International Banking Act of 1978 (12 U.S.C. 3106(a)), shall be treated as a bank holding company for purposes of this title.

(2)

Chairperson

The term Chairperson means the Chairperson of the Council.

(3)

Member agency

The term member agency means an agency represented by a voting member of the Council.

(4)

Nonbank financial company definitions

(A)

Foreign nonbank financial company

The term foreign nonbank financial company means a company (other than a company that is, or is treated in the United States as, a bank holding company or a subsidiary thereof) that is—

(i)

incorporated or organized in a country other than the United States; and

(ii)

substantially engaged in, including through a branch in the United States, activities in the United States that are financial in nature (as defined in section 4(k) of the Bank Holding Company Act of 1956).

(B)

U.S. nonbank financial company

The term U.S. nonbank financial company means a company (other than a bank holding company or a subsidiary thereof, or a Farm Credit System institution chartered and subject to the provisions of the Farm Credit Act of 1971 (12 U.S.C. 2001 et. seq.)) that is—

(i)

incorporated or organized under the laws of the United States or any State; and

(ii)

substantially engaged in activities in the United States that are financial in nature (as defined in section 4(k) of the Bank Holding Company Act of 1956).

(C)

Nonbank Financial company

The term nonbank financial company means a U.S. nonbank financial company and a foreign nonbank financial company.

(D)

Nonbank financial company supervised by the Board of Governors

The term nonbank financial company supervised by the Board of Governors means a nonbank financial company that the Council has determined under section 113 shall be supervised by the Board of Governors.

(5)

Office of Financial Research

The term Office of Financial Research means the office established under section 152.

(6)

Significant institutions

The terms significant nonbank financial company and significant bank holding company have the meanings given those terms by rule of the Board of Governors.

(b)

Definitional criteria

The Board of Governors shall establish, by regulation, the criteria to determine whether a company is substantially engaged in activities in the United States that are financial in nature (as defined in section 4(k) of the Bank Holding Company Act of 1956) for purposes of the definitions of the terms U.S. nonbank financial company and foreign nonbank financial company under subsection (a)(4).

(c)

Foreign nonbank financial companies

For purposes of the authority of the Board of Governors under this title with respect to foreign nonbank financial companies, references in this title to company or subsidiary include only the United States activities and subsidiaries of such foreign company.

A

Financial Stability Oversight Council

111.

Financial Stability Oversight Council established

(a)

Establishment

Effective on the date of enactment of this Act, there is established the Financial Stability Oversight Council.

(b)

Membership

The Council shall consist of the following members:

(1)

Voting members

The voting members, who shall each have 1 vote on the Council shall be—

(A)

the Secretary of the Treasury, who shall serve as Chairperson of the Council;

(B)

the Chairman of the Board of Governors;

(C)

the Comptroller of the Currency;

(D)

the Director of the Bureau;

(E)

the Chairman of the Commission;

(F)

the Chairperson of the Corporation;

(G)

the Chairperson of the Commodity Futures Trading Commission;

(H)

the Director of the Federal Housing Finance Agency; and

(I)

an independent member appointed by the President, by and with the advice and consent of the Senate, having insurance expertise.

(2)

Nonvoting Members

The Director of the Office of Financial Research—

(A)

shall serve in an advisory capacity as a nonvoting member of the Council; and

(B)

may not be excluded from any of the proceedings, meetings, discussions, or deliberations of the Council.

(c)

Terms; vacancy

(1)

Terms

The independent member of the Council shall serve for a term of 6 years.

(2)

Vacancy

Any vacancy on the Council shall be filled in the manner in which the original appointment was made.

(3)

Acting officials may serve

In the event of a vacancy in the office of the head of a member agency or department, and pending the appointment of a successor, or during the absence or disability of the head of a member agency or department, the acting head of the member agency or department shall serve as a member of the Council in the place of that agency or department head.

(d)

Technical and professional advisory committees

The Council may appoint such special advisory, technical, or professional committees as may be useful in carrying out the functions of the Council, including an advisory committee consisting of State regulators, and the members of such committees may be members of the Council, or other persons, or both.

(e)

Meetings

(1)

Timing

The Council shall meet at the call of the Chairperson or a majority of the members then serving, but not less frequently than quarterly.

(2)

Rules for conducting business

The Council shall adopt such rules as may be necessary for the conduct of the business of the Council. Such rules shall be rules of agency organization, procedure, or practice for purposes of section 553 of title 5, United States Code.

(f)

Voting

Unless otherwise specified, the Council shall make all decisions that it is authorized or required to make by a majority vote of the members then serving.

(g)

Nonapplicability of FACA

The Federal Advisory Committee Act (5 U.S.C. App.) shall not apply to the Council, or to any special advisory, technical, or professional committee appointed by the Council, except that, if an advisory, technical, or professional committee has one or more members who are not employees of or affiliated with the United States Government, the Council shall publish a list of the names of the members of such committee.

(h)

Assistance from Federal agencies

Any department or agency of the United States may provide to the Council and any special advisory, technical, or professional committee appointed by the Council, such services, funds, facilities, staff, and other support services as the Council may determine advisable.

(i)

Compensation of members

(1)

Federal employee members

All members of the Council who are officers or employees of the United States shall serve without compensation in addition to that received for their services as officers or employees of the United States.

(2)

Compensation for non-Federal member

Section 5314 of title 5, United States Code, is amended by adding at the end the following:

  • Independent Member of the Financial Stability Oversight Council (1)..
(j)

Detail of Government employees

Any employee of the Federal Government may be detailed to the Council without reimbursement, and such detail shall be without interruption or loss of civil service status or privilege. An employee of the Federal Government detailed to the Council shall report to and be subject to oversight by the Council during the assignment to the Council, and shall be compensated by the department or agency from which the employee was detailed.

112.

Council authority

(a)

Purposes and duties of the Council

(1)

In general

The purposes of the Council are—

(A)

to identify risks to the financial stability of the United States that could arise from the material financial distress or failure of large, interconnected bank holding companies or nonbank financial companies;

(B)

to promote market discipline, by eliminating expectations on the part of shareholders, creditors, and counterparties of such companies that the Government will shield them from losses in the event of failure; and

(C)

to respond to emerging threats to the stability of the United States financial markets.

(2)

Duties

The Council shall, in accordance with this title—

(A)

collect information from member agencies and other Federal and State financial regulatory agencies and, if necessary to assess risks to the United States financial system, direct the Office of Financial Research to collect information from bank holding companies and nonbank financial companies;

(B)

provide direction to, and request data and analyses from, the Office of Financial Research to support the work of the Council;

(C)

monitor the financial services marketplace in order to identify potential threats to the financial stability of the United States;

(D)

facilitate information sharing and coordination among the member agencies and other Federal and State agencies regarding domestic financial services policy development, rulemaking, examinations, reporting requirements, and enforcement actions;

(E)

recommend to the member agencies general supervisory priorities and principles reflecting the outcome of discussions among the member agencies;

(F)

identify gaps in regulation that could pose risks to the financial stability of the United States;

(G)

require supervision by the Board of Governors for nonbank financial companies that may pose risks to the financial stability of the United States in the event of their material financial distress or failure, pursuant to section 113;

(H)

make recommendations to the Board of Governors concerning the establishment of heightened prudential standards for risk-based capital, leverage, liquidity, contingent capital, resolution plans and credit exposure reports, concentration limits, enhanced public disclosures, and overall risk management for nonbank financial companies and large, interconnected bank holding companies supervised by the Board of Governors;

(I)

identify systemically important financial market utilities and payment, clearing, and settlement activities (as that term is defined in title VIII), and require such utilities and activities to be subject to standards established by the Board of Governors;

(J)

make recommendations to primary financial regulatory agencies to apply new or heightened standards and safeguards for financial activities or practices that could create or increase risks of significant liquidity, credit, or other problems spreading among bank holding companies, nonbank financial companies, and United States financial markets;

(K)

make determinations regarding exemptions in title VII, where necessary;

(L)

provide a forum for—

(i)

discussion and analysis of emerging market developments and financial regulatory issues; and

(ii)

resolution of jurisdictional disputes among the members of the Council; and

(M)

annually report to and testify before Congress on—

(i)

the activities of the Council;

(ii)

significant financial market developments and potential emerging threats to the financial stability of the United States;

(iii)

all determinations made under section 113 or title VIII, and the basis for such determinations; and

(iv)

recommendations—

(I)

to enhance the integrity, efficiency, competitiveness, and stability of United States financial markets;

(II)

to promote market discipline; and

(III)

to maintain investor confidence.

(b)

Authority To obtain information

(1)

In general

The Council may receive, and may request the submission of, any data or information from the Office of Financial Research and member agencies, as necessary—

(A)

to monitor the financial services marketplace to identify potential risks to the financial stability of the United States; or

(B)

to otherwise carry out any of the provisions of this title.

(2)

Submissions by the office and member agencies

Notwithstanding any other provision of law, the Office of Financial Research and any member agency are authorized to submit information to the Council.

(3)

Financial data collection

(A)

In general

The Council, acting through the Office of Financial Research, may require the submission of periodic and other reports from any nonbank financial company or bank holding company for the purpose of assessing the extent to which a financial activity or financial market in which the nonbank financial company or bank holding company participates, or the nonbank financial company or bank holding company itself, poses a threat to the financial stability of the United States.

(B)

Mitigation of report burden

Before requiring the submission of reports from any nonbank financial company or bank holding company that is regulated by a member agency or any primary financial regulatory agency, the Council, acting through the Office of Financial Research, shall coordinate with such agencies and shall, whenever possible, rely on information available from the Office of Financial Research or such agencies.

(4)

Back-up examination by the Board of Governors

If the Council is unable to determine whether the financial activities of a nonbank financial company pose a threat to the financial stability of the United States, based on information or reports obtained under paragraph (3), discussions with management, and publicly available information, the Council may request the Board of Governors, and the Board of Governors is authorized, to conduct an examination of the nonbank financial company for the sole purpose of determining whether the nonbank financial company should be supervised by the Board of Governors for purposes of this title.

(5)

Confidentiality

(A)

In general

The Council, the Office of Financial Research, and the other member agencies shall maintain the confidentiality of any data, information, and reports submitted under this subsection and subtitle B.

(B)

Retention of privilege

The submission of any nonpublicly available data or information under this subsection and subtitle B shall not constitute a waiver of, or otherwise affect, any privilege arising under Federal or State law (including the rules of any Federal or State court) to which the data or information is otherwise subject.

(C)

Freedom of information Act

Section 552 of title 5, United States Code, including the exceptions thereunder, shall apply to any data or information submitted under this subsection and subtitle B.

113.

Authority to require supervision and regulation of certain nonbank financial companies

(a)

U.S. Nonbank Financial companies supervised by the Board of Governors

(1)

Determination

The Council, on a nondelegable basis and by a vote of not fewer than 2/3 of the members then serving, including an affirmative vote by the Chairperson, may determine that a U.S. nonbank financial company shall be supervised by the Board of Governors and shall be subject to prudential standards, in accordance with this title, if the Council determines that material financial distress at the U.S. nonbank financial company would pose a threat to the financial stability of the United States.

(2)

Considerations

Each determination under paragraph (1) shall be based on a consideration by the Council of—

(A)

the degree of leverage of the company;

(B)

the amount and nature of the financial assets of the company;

(C)

the amount and types of the liabilities of the company, including the degree of reliance on short-term funding;

(D)

the extent and types of the off-balance-sheet exposures of the company;

(E)

the extent and types of the transactions and relationships of the company with other significant nonbank financial companies and significant bank holding companies;

(F)

the importance of the company as a source of credit for households, businesses, and State and local governments and as a source of liquidity for the United States financial system;

(G)

the recommendation, if any, of a member of the Council;

(H)

the operation of, or ownership interest in, any clearing, settlement, or payment business of the company;

(I)

the extent to which—

(i)

assets are managed rather than owned by the company; and

(ii)

ownership of assets under management is diffuse; and

(J)

any other factors that the Council deems appropriate.

(b)

Foreign Nonbank Financial companies supervised by the Board of Governors

(1)

Determination

The Council, on a nondelegable basis and by a vote of not fewer than 2/3 of the members then serving, including an affirmative vote by the Chairperson, may determine that a foreign nonbank financial company that has substantial assets or operations in the United States shall be supervised by the Board of Governors and shall be subject to prudential standards in accordance with this title, if the Council determines that material financial distress at the foreign nonbank financial company would pose a threat to the financial stability of the United States.

(2)

Considerations

Each determination under paragraph (1) shall be based on a consideration by the Council of—

(A)

the degree of leverage of the company;

(B)

the amount and nature of the United States financial assets of the company;

(C)

the amount and types of the liabilities of the company used to fund activities and operations in the United States, including the degree of reliance on short-term funding;

(D)

the extent of the United States-related off-balance-sheet exposure of the company;

(E)

the extent and type of the transactions and relationships of the company with other significant nonbank financial companies and bank holding companies;

(F)

the importance of the company as a source of credit for United States households, businesses, and State and local governments, and as a source of liquidity for the United States financial system;

(G)

the recommendation, if any, of a member of the Council;

(H)

the extent to which—

(i)

assets are managed rather than owned by the company; and

(ii)

ownership of assets under management is diffuse; and

(I)

any other factors that the Council deems appropriate.

(c)

Reevaluation and rescission

The Council shall—

(1)

not less frequently than annually, reevaluate each determination made under subsections (a) and (b) with respect to each nonbank financial company supervised by the Board of Governors; and

(2)

rescind any such determination, if the Council, by a vote of not fewer than 2/3 of the members then serving, including an affirmative vote by the Chairperson, determines that the nonbank financial company no longer meets the standards under subsection (a) or (b), as applicable.

(d)

Notice and opportunity for hearing and final determination

(1)

In general

The Council shall provide to a nonbank financial company written notice of a proposed determination of the Council, including an explanation of the basis of the proposed determination of the Council, that such nonbank financial company shall be supervised by the Board of Governors and shall be subject to prudential standards in accordance with this title.

(2)

Hearing

Not later than 30 days after the date of receipt of any notice of a proposed determination under paragraph (1), the nonbank financial company may request, in writing, an opportunity for a written or oral hearing before the Council to contest the proposed determination. Upon receipt of a timely request, the Council shall fix a time (not later than 30 days after the date of receipt of the request) and place at which such company may appear, personally or through counsel, to submit written materials (or, at the sole discretion of the Council, oral testimony and oral argument).

(3)

Final determination

Not later than 60 days after the date of a hearing under paragraph (2), the Council shall notify the nonbank financial company of the final determination of the Council, which shall contain a statement of the basis for the decision of the Council.

(4)

No hearing requested

If a nonbank financial company does not make a timely request for a hearing, the Council shall notify the nonbank financial company, in writing, of the final determination of the Council under subsection (a) or (b), as applicable, not later than 10 days after the date by which the company may request a hearing under paragraph (2).

(e)

Emergency exception

(1)

In general

The Council may waive or modify the requirements of subsection (d) with respect to a nonbank financial company, if the Council determines, by a vote of not fewer than 2/3 of the members then serving, including an affirmative vote by the Chairperson, that such waiver or modification is necessary or appropriate to prevent or mitigate threats posed by the nonbank financial company to the financial stability of the United States.

(2)

Notice

The Council shall provide notice of a waiver or modification under this paragraph to the nonbank financial company concerned as soon as practicable, but not later than 24 hours after the waiver or modification is granted.

(3)

Opportunity for hearing

The Council shall allow a nonbank financial company to request, in writing, an opportunity for a written or oral hearing before the Council to contest a waiver or modification under this paragraph, not later than 10 days after the date of receipt of notice of the waiver or modification by the company. Upon receipt of a timely request, the Council shall fix a time (not later than 15 days after the date of receipt of the request) and place at which the nonbank financial company may appear, personally or through counsel, to submit written materials (or, at the sole discretion of the Council, oral testimony and oral argument).

(4)

Notice of final determination

Not later than 30 days after the date of any hearing under paragraph (3), the Council shall notify the subject nonbank financial company of the final determination of the Council under this paragraph, which shall contain a statement of the basis for the decision of the Council.

(f)

Consultation

The Council shall consult with the primary financial regulatory agency, if any, for each nonbank financial company or subsidiary of a nonbank financial company that is being considered for supervision by the Board of Governors under this section before the Council makes any final determination with respect to such nonbank financial company under subsection (a), (b), or (c).

(g)

Judicial review

If the Council makes a final determination under this section with respect to a nonbank financial company, such nonbank financial company may, not later than 30 days after the date of receipt of the notice of final determination under subsection (d)(3) or (e)(4), bring an action in the United States district court for the judicial district in which the home office of such nonbank financial company is located, or in the United States District Court for the District of Columbia, for an order requiring that the final determination be rescinded, and the court shall, upon review, dismiss such action or direct the final determination to be rescinded. Review of such an action shall be limited to whether the final determination made under this section was arbitrary and capricious.

114.

Registration of nonbank financial companies supervised by the Board of Governors

Not later than 180 days after the date of a final Council determination under section 113 that a nonbank financial company is to be supervised by the Board of Governors, such company shall register with the Board of Governors, on forms prescribed by the Board of Governors, which shall include such information as the Board of Governors, in consultation with the Council, may deem necessary or appropriate to carry out this title.

115.

Enhanced supervision and prudential standards for nonbank financial companies supervised by the Board of Governors and certain bank holding companies

(a)

In general

(1)

Purpose

In order to prevent or mitigate risks to the financial stability of the United States that could arise from the material financial distress or failure of large, interconnected financial institutions, the Council may make recommendations to the Board of Governors concerning the establishment and refinement of prudential standards and reporting and disclosure requirements applicable to nonbank financial companies supervised by the Board of Governors and large, interconnected bank holding companies, that—

(A)

are more stringent than those applicable to other nonbank financial companies and bank holding companies that do not present similar risks to the financial stability of the United States; and

(B)

increase in stringency, based on the considerations identified in subsection (b)(3).

(2)

Limitation on bank holding companies

Any standards recommended under subsections (b) through (f) shall not apply to any bank holding company with total consolidated assets of less than $50,000,000,000. The Council may recommend an asset threshold greater than $50,000,000,000 for the applicability of any particular standard under those subsections.

(b)

Development of prudential standards

(1)

In general

The recommendations of the Council under subsection (a) may include—

(A)

risk-based capital requirements;

(B)

leverage limits;

(C)

liquidity requirements;

(D)

resolution plan and credit exposure report requirements;

(E)

concentration limits;

(F)

a contingent capital requirement;

(G)

enhanced public disclosures; and

(H)

overall risk management requirements.

(2)

Prudential standards for foreign financial companies

In making recommendations concerning the standards set forth in paragraph (1) that would apply to foreign nonbank financial companies supervised by the Board of Governors or foreign-based bank holding companies, the Council shall give due regard to the principle of national treatment and competitive equity.

(3)

Considerations

In making recommendations concerning prudential standards under paragraph (1), the Council shall—

(A)

take into account differences among nonbank financial companies supervised by the Board of Governors and bank holding companies described in subsection (a), based on—

(i)

the factors described in subsections (a) and (b) of section 113;

(ii)

whether the company owns an insured depository institution;

(iii)

nonfinancial activities and affiliations of the company; and

(iv)

any other factors that the Council determines appropriate; and

(B)

to the extent possible, ensure that small changes in the factors listed in subsections (a) and (b) of section 113 would not result in sharp, discontinuous changes in the prudential standards established under paragraph (1).

(c)

Contingent capital

(1)

Study required

The Council shall conduct a study of the feasibility, benefits, costs, and structure of a contingent capital requirement for nonbank financial companies supervised by the Board of Governors and bank holding companies described in subsection (a), which study shall include—

(A)

an evaluation of the degree to which such requirement would enhance the safety and soundness of companies subject to the requirement, promote the financial stability of the United States, and reduce risks to United States taxpayers;

(B)

an evaluation of the characteristics and amounts of convertible debt that should be required;

(C)

an analysis of potential prudential standards that should be used to determine whether the contingent capital of a company would be converted to equity in times of financial stress;

(D)

an evaluation of the costs to companies, the effects on the structure and operation of credit and other financial markets, and other economic effects of requiring contingent capital;

(E)

an evaluation of the effects of such requirement on the international competitiveness of companies subject to the requirement and the prospects for international coordination in establishing such requirement; and

(F)

recommendations for implementing regulations.

(2)

Report

The Council shall submit a report to Congress regarding the study required by paragraph (1) not later than 2 years after the date of enactment of this Act.

(3)

Recommendations

(A)

In general

Subsequent to submitting a report to Congress under paragraph (2), the Council may make recommendations to the Board of Governors to require any nonbank financial company supervised by the Board of Governors and any bank holding company described in subsection (a) to maintain a minimum amount of long-term hybrid debt that is convertible to equity in times of financial stress.

(B)

Factors to consider

In making recommendations under this subsection, the Council shall consider—

(i)

an appropriate transition period for implementation of a conversion under this subsection;

(ii)

the factors described in subsection (b)(3);

(iii)

capital requirements applicable to a nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a), and subsidiaries thereof;

(iv)

results of the study required by paragraph (1); and

(v)

any other factor that the Council deems appropriate.

(d)

Resolution plan and credit exposure reports

(1)

Resolution plan

The Council may make recommendations to the Board of Governors concerning the requirement that each nonbank financial company supervised by the Board of Governors and each bank holding company described in subsection (a) report periodically to the Council, the Board of Governors, and the Corporation, the plan of such company for rapid and orderly resolution in the event of material financial distress or failure.

(2)

Credit exposure report

The Council may make recommendations to the Board of Governors concerning the advisability of requiring each nonbank financial company supervised by the Board of Governors and bank holding company described in subsection (a) to report periodically to the Council, the Board of Governors, and the Corporation on—

(A)

the nature and extent to which the company has credit exposure to other significant nonbank financial companies and significant bank holding companies; and

(B)

the nature and extent to which other such significant nonbank financial companies and significant bank holding companies have credit exposure to that company.

(e)

Concentration limits

In order to limit the risks that the failure of any individual company could pose to nonbank financial companies supervised by the Board of Governors or bank holding companies described in subsection (a), the Council may make recommendations to the Board of Governors to prescribe standards to limit such risks, as set forth in section 165.

(f)

Enhanced public disclosures

The Council may make recommendations to the Board of Governors to require periodic public disclosures by bank holding companies described in subsection (a) and by nonbank financial companies supervised by the Board of Governors, in order to support market evaluation of the risk profile, capital adequacy, and risk management capabilities thereof.

116.

Reports

(a)

In general

Subject to subsection (b), the Council, acting through the Office of Financial Research, may require a bank holding company with total consolidated assets of $50,000,000,000 or greater or a nonbank financial company supervised by the Board of Governors, and any subsidiary thereof, to submit certified reports to keep the Council informed as to—

(1)

the financial condition of the company;

(2)

systems for monitoring and controlling financial, operating, and other risks;

(3)

transactions with any subsidiary that is a depository institution; and

(4)

the extent to which the activities and operations of the company and any subsidiary thereof, could, under adverse circumstances, have the potential to disrupt financial markets or affect the overall financial stability of the United States.

(b)

Use of existing reports

(1)

In general

For purposes of compliance with subsection (a), the Council, acting through the Office of Financial Research, shall, to the fullest extent possible, use—

(A)

reports that a bank holding company, nonbank financial company supervised by the Board of Governors, or any functionally regulated subsidiary of such company has been required to provide to other Federal or State regulatory agencies;

(B)

information that is otherwise required to be reported publicly; and

(C)

externally audited financial statements.

(2)

Availability

Each bank holding company described in subsection (a) and nonbank financial company supervised by the Board of Governors, and any subsidiary thereof, shall provide to the Council, at the request of the Council, copies of all reports referred to in paragraph (1).

(3)

Confidentiality

The Council shall maintain the confidentiality of the reports obtained under subsection (a) and paragraph (1)(A) of this subsection.

117.

Treatment of certain companies that cease to be bank holding companies

(a)

Applicability

This section shall apply to any entity or a successor entity that—

(1)

was a bank holding company having total consolidated assets equal to or greater than $50,000,000,000 as of January 1, 2010; and

(2)

received financial assistance under or participated in the Capital Purchase Program established under the Troubled Asset Relief Program authorized by the Emergency Economic Stabilization Act of 2008.

(b)

Treatment

If an entity described in subsection (a) ceases to be a bank holding company at any time after January 1, 2010, then such entity shall be treated as a nonbank financial company supervised by the Board of Governors, as if the Council had made a determination under section 113 with respect to that entity.

(c)

Appeal

(1)

Request for hearing

An entity may request, in writing, an opportunity for a written or oral hearing before the Council to appeal its treatment as a nonbank financial company supervised by the Board of Governors in accordance with this section. Upon receipt of the request, the Council shall fix a time (not later than 30 days after the date of receipt of the request) and place at which such entity may appear, personally or through counsel, to submit written materials (or, at the sole discretion of the Council, oral testimony and oral argument).

(2)

Decision

(A)

Proposed decision

Not later than 60 days after the date of a hearing under paragraph (1), the Council shall submit a report to, and may testify before, the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the proposed decision of the Council regarding an appeal under paragraph (1), which report shall include a statement of the basis for the proposed decision of the Council.

(B)

Notice of final decision

The Council shall notify the subject entity of the final decision of the Council regarding an appeal under paragraph (1), which notice shall contain a statement of the basis for the final decision of the Council, not later than 60 days after the later of—

(i)

the date of the submission of the report under subparagraph (A); or

(ii)

if the Committee on Banking, Housing, and Urban Affairs of the Senate or the Committee on Financial Services of the House of Representatives holds one or more hearings regarding such report, the date of the last such hearing.

(C)

Considerations

In making a decision regarding an appeal under paragraph (1), the Council shall consider whether the company meets the standards under section 113(a) or 113(b), as applicable, and the definition of the term nonbank financial company under section 102. The decision of the Council shall be final, subject to the review under paragraph (3).

(3)

Review

If the Council denies an appeal under this subsection, the Council shall, not less frequently than annually, review and reevaluate the decision.

118.

Council funding

Any expenses of the Council shall be treated as expenses of, and paid by, the Office of Financial Research.

119.

Resolution of supervisory jurisdictional disputes among member agencies

(a)

Request for dispute resolution

The Council shall resolve a dispute among 2 or more member agencies, if—

(1)

a member agency has a dispute with another member agency about the respective jurisdiction over a particular bank holding company, nonbank financial company, or financial activity or product (excluding matters for which another dispute mechanism specifically has been provided under Federal law);

(2)

the Council determines that the disputing agencies cannot, after a demonstrated good faith effort, resolve the dispute without the intervention of the Council; and

(3)

any of the member agencies involved in the dispute—

(A)

provides all other disputants prior notice of the intent to request dispute resolution by the Council; and

(B)

requests in writing, not earlier than 14 days after providing the notice described in subparagraph (A), that the Council resolve the dispute.

(b)

Council decision

The Council shall resolve each dispute described in subsection (a)—

(1)

within a reasonable time after receiving the dispute resolution request;

(2)

after consideration of relevant information provided by each agency party to the dispute; and

(3)

by agreeing with 1 of the disputants regarding the entirety of the matter, or by determining a compromise position.

(c)

Form and binding effect

A Council decision under this section shall—

(1)

be in writing;

(2)

include an explanation of the reasons therefor; and

(3)

be binding on all Federal agencies that are parties to the dispute.

120.

Additional standards applicable to activities or practices for financial stability purposes

(a)

In general

The Council may issue recommendations to the primary financial regulatory agencies to apply new or heightened standards and safeguards, including standards enumerated in section 115, for a financial activity or practice conducted by bank holding companies or nonbank financial companies under their respective jurisdictions, if the Council determines that the conduct of such activity or practice could create or increase the risk of significant liquidity, credit, or other problems spreading among bank holding companies and nonbank financial companies or the financial markets of the United States.

(b)

Procedure for recommendations to regulators

(1)

Notice and opportunity for comment

The Council shall consult with the primary financial regulatory agencies and provide notice to the public and opportunity for comment for any proposed recommendation that the primary financial regulatory agencies apply new or heightened standards and safeguards for a financial activity or practice.

(2)

Criteria

The new or heightened standards and safeguards for a financial activity or practice recommended under paragraph (1)—

(A)

shall take costs to long-term economic growth into account; and

(B)

may include prescribing the conduct of the activity or practice in specific ways (such as by limiting its scope, or applying particular capital or risk management requirements to the conduct of the activity) or prohibiting the activity or practice.

(c)

Implementation of recommended standards

(1)

Role of primary financial regulatory agency

(A)

In general

Each primary financial regulatory agency may impose, require reports regarding, examine for compliance with, and enforce standards in accordance with this section with respect to those entities for which it is the primary financial regulatory agency.

(B)

Rule of construction

The authority under this paragraph is in addition to, and does not limit, any other authority of a primary financial regulatory agency. Compliance by an entity with actions taken by a primary financial regulatory agency under this section shall be enforceable in accordance with the statutes governing the respective jurisdiction of the primary financial regulatory agency over the entity, as if the agency action were taken under those statutes.

(2)

Imposition of standards

The primary financial regulatory agency shall impose the standards recommended by the Council in accordance with subsection (a), or similar standards that the Council deems acceptable, or shall explain in writing to the Council, not later than 90 days after the date on which the Council issues the recommendation, why the agency has determined not to follow the recommendation of the Council.

(d)

Report to Congress

The Council shall report to Congress on—

(1)

any recommendations issued by the Council under this section;

(2)

the implementation of, or failure to implement such recommendation on the part of a primary financial regulatory agency; and

(3)

in any case in which no primary financial regulatory agency exists for the nonbank financial company conducting financial activities or practices referred to in subsection (a), recommendations for legislation that would prevent such activities or practices from threatening the stability of the financial system of the United States.

(e)

Effect of rescission of identification

(1)

Notice

The Council may recommend to the relevant primary financial regulatory agency that a financial activity or practice no longer requires any standards or safeguards implemented under this section.

(2)

Determination of primary financial regulatory agency to continue

(A)

In general

Upon receipt of a recommendation under paragraph (1), a primary financial regulatory agency that has imposed standards under this section shall determine whether standards that it has imposed under this section should remain in effect.

(B)

Appeal process

Each primary financial regulatory agency that has imposed standards under this section shall promulgate regulations to establish a procedure under which entities under its jurisdiction may appeal a determination by such agency under this paragraph that standards imposed under this section should remain in effect.

121.

Mitigation of risks to financial stability

(a)

Mitigatory actions

If the Board of Governors determines that a bank holding company with total consolidated assets of $50,000,000,000 or more, or a nonbank financial company supervised by the Board of Governors, poses a grave threat to the financial stability of the United States, the Board of Governors, upon an affirmative vote of not fewer than 2/3 of the Council members then serving, shall require the subject company—

(1)

to terminate one or more activities;

(2)

to impose conditions on the manner in which the company conducts one or more activities; or

(3)

if the Board of Governors determines that such action is inadequate to mitigate a threat to the financial stability of the United States in its recommendation, to sell or otherwise transfer assets or off-balance-sheet items to unaffiliated entities.

(b)

Notice and hearing

(1)

In general

The Board of Governors, in consultation with the Council, shall provide to a company described in subsection (a) written notice that such company is being considered for mitigatory action pursuant to this section, including an explanation of the basis for, and description of, the proposed mitigatory action.

(2)

Hearing

Not later than 30 days after the date of receipt of notice under paragraph (1), the company may request, in writing, an opportunity for a written or oral hearing before the Board of Governors to contest the proposed mitigatory action. Upon receipt of a timely request, the Board of Governors shall fix a time (not later than 30 days after the date of receipt of the request) and place at which such company may appear, personally or through counsel, to submit written materials (or, at the discretion of the Board of Governors, in consultation with the Council, oral testimony and oral argument).

(3)

Decision

Not later than 60 days after the date of a hearing under paragraph (2), or not later than 60 days after the provision of a notice under paragraph (1) if no hearing was held, the Board of Governors shall notify the company of the final decision of the Board of Governors, including the results of the vote of the Council, as described in subsection (a).

(c)

Factors for consideration

The Board of Governors and the Council shall take into consideration the factors set forth in subsection (a) or (b) of section 113, as applicable, in a determination described in subsection (a) and in a decision described in subsection (b).

(d)

Application to foreign financial companies

The Board of Governors may prescribe regulations regarding the application of this section to foreign nonbank financial companies supervised by the Board of Governors and foreign-based bank holding companies, giving due regard to the principle of national treatment and competitive equity.

B

Office of Financial Research

151.

Definitions

For purposes of this subtitle—

(1)

the terms Office and Director mean the Office of Financial Research established under this subtitle and the Director thereof, respectively;

(2)

the term financial company has the same meaning as in title II, and includes an insured depository institution and an insurance company;

(3)

the term Data Center means the data center established under section 154;

(4)

the term Research and Analysis Center means the research and analysis center established under section 154;

(5)

the term financial transaction data means the structure and legal description of a financial contract, with sufficient detail to describe the rights and obligations between counterparties and make possible an independent valuation;

(6)

the term position data

(A)

means data on financial assets or liabilities held on the balance sheet of a financial company, where positions are created or changed by the execution of a financial transaction; and

(B)

includes information that identifies counterparties, the valuation by the financial company of the position, and information that makes possible an independent valuation of the position;

(7)

the term financial contract means a legally binding agreement between 2 or more counterparties, describing rights and obligations relating to the future delivery of items of intrinsic or extrinsic value among the counterparties; and

(8)

the term financial instrument means a financial contract in which the terms and conditions are publicly available, and the roles of one or more of the counterparties are assignable without the consent of any of the other counterparties (including common stock of a publicly traded company, government bonds, or exchange traded futures and options contracts).

152.

Office of Financial Research established

(a)

Establishment

There is established within the Department of the Treasury the Office of Financial Research.

(b)

Director

(1)

In general

The Office shall be headed by a Director, who shall be appointed by the President, by and with the advice and consent of the Senate.

(2)

Term of service

The Director shall serve for a term of 6 years, except that, in the event that a successor is not nominated and confirmed by the end of the term of service of a Director, the Director may continue to serve until such time as the next Director is appointed and confirmed.

(3)

Executive level

The Director shall be compensated at level III of the Executive Schedule.

(4)

Prohibition on dual service

The individual serving in the position of Director may not, during such service, also serve as the head of any financial regulatory agency.

(5)

Responsibilities, duties, and authority

The Director shall have sole discretion in the manner in which the Director fulfills the responsibilities and duties and exercises the authorities described in this subtitle.

(c)

Budget

The Director, in consultation with the Chairperson, shall establish the annual budget of the Office.

(d)

Office Personnel

(1)

In general

The Director, in consultation with the Chairperson, may fix the number of, and appoint and direct, all employees of the Office.

(2)

Compensation

The Director, in consultation with the Chairperson, shall fix, adjust, and administer the pay for all employees of the Office, without regard to chapter 51 or subchapter III of chapter 53 of title 5, United States Code, relating to classification of positions and General Schedule pay rates.

(3)

Comparability

Section 1206(a) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833b(a)) is amended—

(A)

by striking Finance Board, and inserting Finance Board, the Office of Financial Research, and the Bureau of Consumer Financial Protection; and

(B)

by striking and the Office of Thrift Supervision,.

(e)

Assistance from Federal agencies

Any department or agency of the United States may provide to the Office and any special advisory, technical, or professional committees appointed by the Office, such services, funds, facilities, staff, and other support services as the Office may determine advisable. Any Federal Government employee may be detailed to the Office without reimbursement, and such detail shall be without interruption or loss of civil service status or privilege.

(f)

Procurement of temporary and intermittent services

The Director may procure temporary and intermittent services under section 3109(b) of title 5, United States Code, at rates for individuals which do not exceed the daily equivalent of the annual rate of basic pay prescribed for level V of the Executive Schedule under section 5316 of such title.

(g)

Contracting and leasing authority

Notwithstanding the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.) or any other provision of law, the Director may—

(1)

enter into and perform contracts, execute instruments, and acquire, in any lawful manner, such goods and services, or personal or real property (or property interest), as the Director deems necessary to carry out the duties and responsibilities of the Office; and

(2)

hold, maintain, sell, lease, or otherwise dispose of the property (or property interest) acquired under paragraph (1).

(h)

Non-compete

The Director and any staff of the Office who has had access to the transaction or position data maintained by the Data Center or other business confidential information about financial entities required to report to the Office, may not, for a period of 1 year after last having access to such transaction or position data or business confidential information, be employed by or provide advice or consulting services to a financial company, regardless of whether that entity is required to report to the Office. For staff whose access to business confidential information was limited, the Director may provide, on a case-by-case basis, for a shorter period of post-employment prohibition, provided that the shorter period does not compromise business confidential information.

(i)

Technical and professional advisory committees

The Office, in consultation with the Chairperson, may appoint such special advisory, technical, or professional committees as may be useful in carrying out the functions of the Office, and the members of such committees may be staff of the Office, or other persons, or both.

(j)

Fellowship Program

The Office, in consultation with the Chairperson, may establish and maintain an academic and professional fellowship program, under which qualified academics and professionals shall be invited to spend not longer than 2 years at the Office, to perform research and to provide advanced training for Office personnel.

(k)

Executive schedule compensation

Section 5314 of title 5, United States Code, is amended by adding at the end the following new item:

Director of the Office of Financial Research..

153.

Purpose and duties of the Office

(a)

Purpose and duties

The purpose of the Office is to support the Council in fulfilling the purposes and duties of the Council, as set forth in subtitle A, and to support member agencies, by—

(1)

collecting data on behalf of the Council, and providing such data to the Council and member agencies;

(2)

standardizing the types and formats of data reported and collected;

(3)

performing applied research and essential long-term research;

(4)

developing tools for risk measurement and monitoring;

(5)

performing other related services;

(6)

making the results of the activities of the Office available to financial regulatory agencies; and

(7)

assisting such member agencies in determining the types and formats of data authorized by this Act to be collected by such member agencies.

(b)

Administrative authority

The Office may—

(1)

share data and information, including software developed by the Office, with the Council and member agencies, which shared data, information, and software—

(A)

shall be maintained with at least the same level of security as is used by the Office; and

(B)

may not be shared with any individual or entity without the permission of the Council;

(2)

sponsor and conduct research projects; and

(3)

assist, on a reimbursable basis, with financial analyses undertaken at the request of other Federal agencies that are not member agencies.

(c)

Rulemaking authority

(1)

Scope

The Office, in consultation with the Chairperson, shall issue rules, regulations, and orders only to the extent necessary to carry out the purposes and duties described in paragraphs (1), (2), and (7) of subsection (a).

(2)

Standardization

Member agencies, in consultation with the Office, shall implement regulations promulgated by the Office under paragraph (1) to standardize the types and formats of data reported and collected on behalf of the Council, as described in subsection (a)(2). If a member agency fails to implement such regulations prior to the expiration of the 3-year period following the date of publication of final regulations, the Office, in consultation with the Chairperson, may implement such regulations with respect to the financial entities under the jurisdiction of the member agency.

(d)

Testimony

(1)

In general

The Director of the Office shall report to and testify before the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives annually on the activities of the Office, including the work of the Data Center and the Research and Analysis Center, and the assessment of the Office of significant financial market developments and potential emerging threats to the financial stability of the United States.

(2)

No prior review

No officer or agency of the United States shall have any authority to require the Director to submit the testimony required under paragraph (1) or other Congressional testimony to any officer or agency of the United States for approval, comment, or review prior to the submission of such testimony. Any such testimony to Congress shall include a statement that the views expressed therein are those of the Director and do not necessarily represent the views of the President.

(e)

Additional reports

The Director may provide additional reports to Congress concerning the financial stability of the United States. The Director shall notify the Council of any such additional reports provided to Congress.

(f)

Subpoena

(1)

In general

The Director may require, by subpoena, the production of the data requested under subsection (a)(1) and section 154(b)(1), but only upon a written finding by the Director that—

(A)

such data is required to carry out the functions described under this subtitle; and

(B)

the Office has coordinated with such agency, as required under section 154(b)(1)(B)(ii).

(2)

Format

Subpoenas under paragraph (1) shall bear the signature of the Director, and shall be served by any person or class of persons designated by the Director for that purpose.

(3)

Enforcement

In the case of contumacy or failure to obey a subpoena, the subpoena shall be enforceable by order of any appropriate district court of the United States. Any failure to obey the order of the court may be punished by the court as a contempt of court.

154.

Organizational structure; responsibilities of primary programmatic units

(a)

In general

There are established within the Office, to carry out the programmatic responsibilities of the Office—

(1)

the Data Center; and

(2)

the Research and Analysis Center.

(b)

Data Center

(1)

General duties

(A)

Data collection

The Data Center, on behalf of the Council, shall collect, validate, and maintain all data necessary to carry out the duties of the Data Center, as described in this subtitle. The data assembled shall be obtained from member agencies, commercial data providers, publicly available data sources, and financial entities under subparagraph (B).

(B)

Authority

(i)

In general

The Office may, as determined by the Council or by the Director in consultation with the Council, require the submission of periodic and other reports from any financial company for the purpose of assessing the extent to which a financial activity or financial market in which the financial company participates, or the financial company itself, poses a threat to the financial stability of the United States.

(ii)

Mitigation of report burden

Before requiring the submission of a report from any financial company that is regulated by a member agency or any primary financial regulatory agency, the Office shall coordinate with such agencies and shall, whenever possible, rely on information available from such agencies.

(C)

Rulemaking

The Office shall promulgate regulations pursuant to subsections (a)(1), (a)(2), (a)(7), and (c)(1) of section 153 regarding the type and scope of the data to be collected by the Data Center under this paragraph.

(2)

Responsibilities

(A)

Publication

The Data Center shall prepare and publish, in a manner that is easily accessible to the public—

(i)

a financial company reference database;

(ii)

a financial instrument reference database; and

(iii)

formats and standards for Office data, including standards for reporting financial transaction and position data to the Office.

(B)

Confidentiality

The Data Center shall not publish any confidential data under subparagraph (A).

(3)

Information security

The Director shall ensure that data collected and maintained by the Data Center are kept secure and protected against unauthorized disclosure.

(4)

Catalog of financial entities and instruments

The Data Center shall maintain a catalog of the financial entities and instruments reported to the Office.

(5)

Availability to the council and member agencies

The Data Center shall make data collected and maintained by the Data Center available to the Council and member agencies, as necessary to support their regulatory responsibilities.

(6)

Other authority

The Office shall, after consultation with the member agencies, provide certain data to financial industry participants and to the general public to increase market transparency and facilitate research on the financial system, to the extent that intellectual property rights are not violated, business confidential information is properly protected, and the sharing of such information poses no significant threats to the financial system of the United States.

(c)

Research and analysis center

(1)

General duties

The Research and Analysis Center, on behalf of the Council, shall develop and maintain independent analytical capabilities and computing resources—

(A)

to develop and maintain metrics and reporting systems for risks to the financial stability of the United States;

(B)

to monitor, investigate, and report on changes in system-wide risk levels and patterns to the Council and Congress;

(C)

to conduct, coordinate, and sponsor research to support and improve regulation of financial entities and markets;

(D)

to evaluate and report on stress tests or other stability-related evaluations of financial entities overseen by the member agencies;

(E)

to maintain expertise in such areas as may be necessary to support specific requests for advice and assistance from financial regulators;

(F)

to investigate disruptions and failures in the financial markets, report findings, and make recommendations to the Council based on those findings;

(G)

to conduct studies and provide advice on the impact of policies related to systemic risk; and

(H)

to promote best practices for financial risk management.

(d)

Reporting responsibilities

(1)

Required reports

Not later than 2 years after the date of enactment of this Act, and not later than 120 days after the end of each fiscal year thereafter, the Office shall prepare and submit a report to Congress.

(2)

Content

Each report required by this subsection shall assess the state of the United States financial system, including—

(A)

an analysis of any threats to the financial stability of the United States;

(B)

the status of the efforts of the Office in meeting the mission of the Office; and

(C)

key findings from the research and analysis of the financial system by the Office.

155.

Funding

(a)

Financial research fund

(1)

Fund established

There is established in the Treasury of the United States a separate fund to be known as the Financial Research Fund.

(2)

Fund receipts

All amounts provided to the Office under subsection (c), and all assessments that the Office receives under subsection (d) shall be deposited into the Financial Research Fund.

(3)

Investments authorized

(A)

Amounts in fund may be invested

The Director may request the Secretary to invest the portion of the Financial Research Fund that is not, in the judgment of the Director, required to meet the needs of the Office.

(B)

Eligible investments

Investments shall be made by the Secretary in obligations of the United States or obligations that are guaranteed as to principal and interest by the United States, with maturities suitable to the needs of the Financial Research Fund, as determined by the Director.

(4)

Interest and proceeds credited

The interest on, and the proceeds from the sale or redemption of, any obligations held in the Financial Research Fund shall be credited to and form a part of the Financial Research Fund.

(b)

Use of funds

(1)

In general

Funds obtained by, transferred to, or credited to the Financial Research Fund shall be immediately available to the Office, and shall remain available until expended, to pay the expenses of the Office in carrying out the duties and responsibilities of the Office.

(2)

Fees, assessments, and other funds not government funds

Funds obtained by, transferred to, or credited to the Financial Research Fund shall not be construed to be Government funds or appropriated monies.

(3)

Amounts not subject to apportionment

Notwithstanding any other provision of law, amounts in the Financial Research Fund shall not be subject to apportionment for purposes of chapter 15 of title 31, United States Code, or under any other authority, or for any other purpose.

(c)

Interim funding

During the 2-year period following the date of enactment of this Act, the Board of Governors shall provide to the Office an amount sufficient to cover the expenses of the Office.

(d)

Permanent self-funding

(1)

In general

Beginning 2 years after the date of enactment of this Act, the Secretary shall establish, by regulation, and with the approval of the Council, an assessment schedule, including the assessment base and rates, applicable to bank holding companies with total consolidated assets of $50,000,000,000 or greater and nonbank financial companies supervised by the Board of Governors, that takes into account differences among such companies, based on the considerations for establishing the prudential standards under section 115, to collect assessments equal to the estimated total expenses of the Office.

(2)

Shortfall

To the extent that the assessments under paragraph (1) do not fully cover the total expenses of the Office, the Board of Governors shall provide to the Office an amount sufficient to cover the difference.

156.

Transition oversight

(a)

Purpose

The purpose of this section is to ensure that the Office—

(1)

has an orderly and organized startup;

(2)

attracts and retains a qualified workforce; and

(3)

establishes comprehensive employee training and benefits programs.

(b)

Reporting requirement

(1)

In general

The Office shall submit an annual report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives that includes the plans described in paragraph (2).

(2)

Plans

The plans described in this paragraph are as follows:

(A)

Training and workforce development plan

The Office shall submit a training and workforce development plan that includes, to the extent practicable—

(i)

identification of skill and technical expertise needs and actions taken to meet those requirements;

(ii)

steps taken to foster innovation and creativity;

(iii)

leadership development and succession planning; and

(iv)

effective use of technology by employees.

(B)

Workplace flexibility plan

The Office shall submit a workforce flexibility plan that includes, to the extent practicable—

(i)

telework;

(ii)

flexible work schedules;

(iii)

phased retirement;

(iv)

reemployed annuitants;

(v)

part-time work;

(vi)

job sharing;

(vii)

parental leave benefits and childcare assistance;

(viii)

domestic partner benefits;

(ix)

other workplace flexibilities; or

(x)

any combination of the items described in clauses (i) through (ix).

(C)

Recruitment and retention plan

The Office shall submit a recruitment and retention plan that includes, to the extent practicable, provisions relating to—

(i)

the steps necessary to target highly qualified applicant pools with diverse backgrounds;

(ii)

streamlined employment application processes;

(iii)

the provision of timely notification of the status of employment applications to applicants; and

(iv)

the collection of information to measure indicators of hiring effectiveness.

(c)

Expiration

The reporting requirement under subsection (b) shall terminate 5 years after the date of enactment of this Act.

(d)

Rule of construction

Nothing in this section may be construed to affect—

(1)

a collective bargaining agreement, as that term is defined in section 7103(a)(8) of title 5, United States Code, that is in effect on the date of enactment of this Act; or

(2)

the rights of employees under chapter 71 of title 5, United States Code.

C

Additional Board of Governors authority for certain nonbank financial companies and bank holding companies

161.

Reports by and examinations of nonbank financial companies by the Board of Governors

(a)

Reports

(1)

In General

The Board of Governors may require each nonbank financial company supervised by the Board of Governors, and any subsidiary thereof, to submit reports under oath, to keep the Board of Governors informed as to—

(A)

the financial condition of the company or subsidiary, systems of the company or subsidiary for monitoring and controlling financial, operating, and other risks, and the extent to which the activities and operations of the company or subsidiary pose a threat to the financial stability of the United States; and

(B)

compliance by the company or subsidiary with the requirements of this subtitle.

(2)

Use of existing reports and information

In carrying out subsection (a), the Board of Governors shall, to the fullest extent possible, use—

(A)

reports and supervisory information that a nonbank financial company or subsidiary thereof has been required to provide to other Federal or State regulatory agencies;

(B)

information otherwise obtainable from Federal or State regulatory agencies;

(C)

information that is otherwise required to be reported publicly; and

(D)

externally audited financial statements of such company or subsidiary.

(3)

Availability

Upon the request of the Board of Governors, a nonbank financial company supervised by the Board of Governors, or a subsidiary thereof, shall promptly provide to the Board of Governors any information described in paragraph (2).

(b)

Examinations

(1)

In general

Subject to paragraph (2), the Board of Governors may examine any nonbank financial company supervised by the Board of Governors and any subsidiary of such company, to determine—

(A)

the nature of the operations and financial condition of the company and such subsidiary;

(B)

the financial, operational, and other risks within the company that may pose a threat to the safety and soundness of such company or to the financial stability of the United States;

(C)

the systems for monitoring and controlling such risks; and

(D)

compliance by the company with the requirements of this subtitle.

(2)

Use of examination reports and information

For purposes of this subsection, the Board of Governors shall, to the fullest extent possible, rely on reports of examination of any depository institution subsidiary or functionally regulated subsidiary made by the primary financial regulatory agency for that subsidiary, and on information described in subsection (a)(2).

(c)

Coordination with primary financial regulatory agency

The Board of Governors shall—

(1)

provide to the primary financial regulatory agency for any company or subsidiary, reasonable notice before requiring a report, requesting information, or commencing an examination of such subsidiary under this section; and

(2)

avoid duplication of examination activities, reporting requirements, and requests for information, to the extent possible.

162.

Enforcement

(a)

In general

Except as provided in subsection (b), a nonbank financial company supervised by the Board of Governors and any subsidiaries of such company (other than any depository institution subsidiary) shall be subject to the provisions of subsections (b) through (n) of section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818), in the same manner and to the same extent as if the company were a bank holding company, as provided in section 8(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1818(b)(3)).

(b)

Enforcement authority for functionally regulated subsidiaries

(1)

Referral

If the Board of Governors determines that a condition, practice, or activity of a depository institution subsidiary or functionally regulated subsidiary of a nonbank financial company supervised by the Board of Governors does not comply with the regulations or orders prescribed by the Board of Governors under this Act, or otherwise poses a threat to the financial stability of the United States, the Board of Governors may recommend, in writing, to the primary financial regulatory agency for the subsidiary that such agency initiate a supervisory action or enforcement proceeding. The recommendation shall be accompanied by a written explanation of the concerns giving rise to the recommendation.

(2)

Back-up authority of the Board of Governors

If, during the 60-day period beginning on the date on which the primary financial regulatory agency receives a recommendation under paragraph (1), the primary financial regulatory agency does not take supervisory or enforcement action against a subsidiary that is acceptable to the Board of Governors, the Board of Governors (upon a vote of its members) may take the recommended supervisory or enforcement action, as if the subsidiary were a bank holding company subject to supervision by the Board of Governors.

163.

Acquisitions

(a)

Acquisitions of banks; treatment as a bank holding company

For purposes of section 3 of the Bank Holding Company Act of 1956 (12 U.S.C. 1842), a nonbank financial company supervised by the Board of Governors shall be deemed to be, and shall be treated as, a bank holding company.

(b)

Acquisition of nonbank companies

(1)

Prior notice for large acquisitions

Notwithstanding section 4(k)(6)(B) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)(6)(B)), a bank holding company with total consolidated assets equal to or greater than $50,000,000,000 or a nonbank financial company supervised by the Board of Governors shall not acquire direct or indirect ownership or control of any voting shares of any company (other than an insured depository institution) that is engaged in activities described in section 4(k) of the Bank Holding Company Act of 1956 having total consolidated assets of $10,000,000,000 or more, without providing written notice to the Board of Governors in advance of the transaction.

(2)

Exemptions

The prior notice requirement in paragraph (1) shall not apply with regard to the acquisition of shares that would qualify for the exemptions in section 4(c) or section 4(k)(4)(E) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(c) and (k)(4)(E)).

(3)

Notice procedures

The notice procedures set forth in section 4(j)(1) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(j)(1)), without regard to section 4(j)(3) of that Act, shall apply to an acquisition of any company (other than an insured depository institution) by a bank holding company with total consolidated assets equal to or greater than $50,000,000,000 or a nonbank financial company supervised by the Board of Governors, as described in paragraph (1), including any such company engaged in activities described in section 4(k) of that Act.

(4)

Standards for review

In addition to the standards provided in section 4(j)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(j)(2)), the Board of Governors shall consider the extent to which the proposed acquisition would result in greater or more concentrated risks to global or United States financial stability or the United States economy.

164.

Prohibition against management interlocks between certain financial companies

A nonbank financial company supervised by the Board of Governors shall be treated as a bank holding company for purposes of the Depository Institutions Management Interlocks Act (12 U.S.C. 3201 et seq.), except that the Board of Governors shall not exercise the authority provided in section 7 of that Act (12 U.S.C. 3207) to permit service by a management official of a nonbank financial company supervised by the Board of Governors as a management official of any bank holding company with total consolidated assets equal to or greater than $50,000,000,000, or other nonaffiliated nonbank financial company supervised by the Board of Governors (other than to provide a temporary exemption for interlocks resulting from a merger, acquisition, or consolidation).

165.

Enhanced supervision and prudential standards for nonbank financial companies supervised by the Board of Governors and certain bank holding companies

(a)

In general

(1)

Purpose

In order to prevent or mitigate risks to the financial stability of the United States that could arise from the material financial distress or failure of large, interconnected financial institutions, the Board of Governors shall, on its own or pursuant to recommendations by the Council under section 115, establish prudential standards and reporting and disclosure requirements applicable to nonbank financial companies supervised by the Board of Governors and large, interconnected bank holding companies that—

(A)

are more stringent than the standards and requirements applicable to nonbank financial companies and bank holding companies that do not present similar risks to the financial stability of the United States; and

(B)

increase in stringency, based on the considerations identified in subsection (b)(3).

(2)

Limitation on bank holding companies

Any standards established under subsections (b) through (f) shall not apply to any bank holding company with total consolidated assets of less than $50,000,000,000, but the Board of Governors may establish an asset threshold greater than $50,000,000,000 for the applicability of any particular standard under subsections (b) through (f).

(b)

Development of prudential standards

(1)

In general

(A)

Required standards

The Board of Governors shall, by regulation or order, establish prudential standards for nonbank financial companies supervised by the Board of Governors and bank holding companies described in subsection (a), that shall include—

(i)

risk-based capital requirements;

(ii)

leverage limits;

(iii)

liquidity requirements;

(iv)

resolution plan and credit exposure report requirements; and

(v)

concentration limits.

(B)

Additional standards authorized

The Board of Governors may, by regulation or order, establish prudential standards for nonbank financial companies supervised by the Board of Governors and bank holding companies described in subsection (a), that include—

(i)

a contingent capital requirement;

(ii)

enhanced public disclosures; and

(iii)

overall risk management requirements.

(2)

Prudential standards for foreign financial companies

In applying the standards set forth in paragraph (1) to foreign nonbank financial companies supervised by the Board of Governors and to foreign-based bank holding companies, the Board of Governors shall give due regard to the principle of national treatment and competitive equity.

(3)

Considerations

In prescribing prudential standards under paragraph (1), the Board of Governors shall—

(A)

take into account differences among nonbank financial companies supervised by the Board of Governors and bank holding companies described in subsection (a), based on—

(i)

the factors described in subsections (a) and (b) of section 113;

(ii)

whether the company owns an insured depository institution;

(iii)

nonfinancial activities and affiliations of the company; and

(iv)

any other factors that the Board of Governors determines appropriate;

(B)

to the extent possible, ensure that small changes in the factors listed in subsections (a) and (b) of section 113 would not result in sharp, discontinuous changes in the prudential standards established under paragraph (1) of this subsection; and

(C)

take into account any recommendations of the Council under section 115.

(4)

Report

The Board of Governors shall submit an annual report to Congress regarding the implementation of the prudential standards required pursuant to paragraph (1), including the use of such standards to mitigate risks to the financial stability of the United States.

(c)

Contingent capital

(1)

In general

Subsequent to submission by the Council of a report to Congress under section 115(c), the Board of Governors may promulgate regulations that require each nonbank financial company supervised by the Board of Governors and bank holding companies described in subsection (a) to maintain a minimum amount of long-term hybrid debt that is convertible to equity in times of financial stress.

(2)

Factors to consider

In establishing regulations under this subsection, the Board of Governors shall consider—

(A)

the results of the study undertaken by the Council, and any recommendations of the Council, under section 115(c);

(B)

an appropriate transition period for implementation of a conversion under this subsection;

(C)

the factors described in subsection (b)(3)(A);

(D)

capital requirements applicable to the nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a), and subsidiaries thereof; and

(E)

any other factor that the Board of Governors deems appropriate.

(d)

Resolution plan and credit exposure reports

(1)

Resolution plan

The Board of Governors shall require each nonbank financial company supervised by the Board of Governors and bank holding companies described in subsection (a) to report periodically to the Board of Governors, the Council, and the Corporation the plan of such company for rapid and orderly resolution in the event of material financial distress or failure.

(2)

Credit exposure report

The Board of Governors shall require each nonbank financial company supervised by the Board of Governors and bank holding companies described in subsection (a) to report periodically to the Board of Governors, the Council, and the Corporation on—

(A)

the nature and extent to which the company has credit exposure to other significant nonbank financial companies and significant bank holding companies; and

(B)

the nature and extent to which other significant nonbank financial companies and significant bank holding companies have credit exposure to that company.

(3)

Review

The Board of Governors and the Corporation shall review the information provided in accordance with this section by each nonbank financial company supervised by the Board of Governors and bank holding company described in subsection (a).

(4)

Notice of deficiencies

If the Board of Governors and the Corporation jointly determine, based on their review under paragraph (3), that the resolution plan of a nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a) is not credible or would not facilitate an orderly resolution of the company under title 11, United States Code—

(A)

the Board of Governors and the Corporation shall notify the company, as applicable, of the deficiencies in the resolution plan; and

(B)

the company shall resubmit the resolution plan within a time frame determined by the Board of Governors and the Corporation, with revisions demonstrating that the plan is credible and would result in an orderly resolution under title 11, United States Code, including any proposed changes in business operations and corporate structure to facilitate implementation of the plan.

(5)

Failure to resubmit credible plan

(A)

In general

If a nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a) fails to timely resubmit the resolution plan as required under paragraph (4), with such revisions as are required under subparagraph (B), the Board of Governors and the Corporation may jointly impose more stringent capital, leverage, or liquidity requirements, or restrictions on the growth, activities, or operations of the company, or any subsidiary thereof, until such time as the company resubmits a plan that remedies the deficiencies.

(B)

Divestiture

The Board of Governors and the Corporation, in consultation with the Council, may direct a nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a), by order, to divest certain assets or operations identified by the Board of Governors and the Corporation, to facilitate an orderly resolution of such company under title 11, United States Code, in the event of the failure of such company, in any case in which—

(i)

the Board of Governors and the Corporation have jointly imposed more stringent requirements on the company pursuant to subparagraph (A); and

(ii)

the company has failed, within the 2-year period beginning on the date of the imposition of such requirements under subparagraph (A), to resubmit the resolution plan with such revisions as were required under paragraph (4)(B).

(6)

Rules

Not later than 18 months after the date of enactment of this Act, the Board of Governors and the Corporation shall jointly issue final rules implementing this subsection.

(e)

Concentration limits

(1)

Standards

In order to limit the risks that the failure of any individual company could pose to a nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a), the Board of Governors, by regulation, shall prescribe standards that limit such risks.

(2)

Limitation on credit exposure

The regulations prescribed by the Board of Governors under paragraph (1) shall prohibit each nonbank financial company supervised by the Board of Governors and bank holding company described in subsection (a) from having credit exposure to any unaffiliated company that exceeds 25 percent of the capital stock and surplus (or such lower amount as the Board of Governors may determine by regulation to be necessary to mitigate risks to the financial stability of the United States) of the company.

(3)

Credit exposure

For purposes of paragraph (2), credit exposure to a company means—

(A)

all extensions of credit to the company, including loans, deposits, and lines of credit;

(B)

all repurchase agreements and reverse repurchase agreements with the company;

(C)

all securities borrowing and lending transactions with the company, to the extent that such transactions create credit exposure for the nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a);

(D)

all guarantees, acceptances, or letters of credit (including endorsement or standby letters of credit) issued on behalf of the company;

(E)

all purchases of or investment in securities issued by the company;

(F)

counterparty credit exposure to the company in connection with a derivative transaction between the nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a) and the company; and

(G)

any other similar transactions that the Board of Governors, by regulation, determines to be a credit exposure for purposes of this section.

(4)

Attribution rule

For purposes of this subsection, any transaction by a nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a) with any person is a transaction with a company, to the extent that the proceeds of the transaction are used for the benefit of, or transferred to, that company.

(5)

Rulemaking

The Board of Governors may issue such regulations and orders, including definitions consistent with this section, as may be necessary to administer and carry out this subsection.

(6)

Exemptions

The Board of Governors may, by regulation or order, exempt transactions, in whole or in part, from the definition of credit exposure for purposes of this subsection, if the Board of Governors finds that the exemption is in the public interest and is consistent with the purpose of this subsection.

(7)

Transition period

(A)

In general

This subsection and any regulations and orders of the Board of Governors under this subsection shall not be effective until 3 years after the date of enactment of this Act.

(B)

Extension authorized

The Board of Governors may extend the period specified in subparagraph (A) for not longer than an additional 2 years.

(f)

Enhanced public disclosures

The Board of Governors may prescribe, by regulation, periodic public disclosures by nonbank financial companies supervised by the Board of Governors and bank holding companies described in subsection (a) in order to support market evaluation of the risk profile, capital adequacy, and risk management capabilities thereof.

(g)

Risk committee

(1)

Nonbank financial companies supervised by the Board of Governors

The Board of Governors shall require each nonbank financial company supervised by the Board of Governors that is a publicly traded company to establish a risk committee, as set forth in paragraph (3), not later than 1 year after the date of receipt of a notice of final determination under section 113(d)(3) with respect to such nonbank financial company supervised by the Board of Governors.

(2)

Certain bank holding companies

(A)

Mandatory regulations

The Board of Governors shall issue regulations requiring each bank holding company that is a publicly traded company and that has total consolidated assets of not less than $10,000,000,000 to establish a risk committee, as set forth in paragraph (3).

(B)

Permissive regulations

The Board of Governors may require each bank holding company that is a publicly traded company and that has total consolidated assets of less than $10,000,000,000 to establish a risk committee, as set forth in paragraph (3), as determined necessary or appropriate by the Board of Governors to promote sound risk management practices.

(3)

Risk committee

A risk committee required by this subsection shall—

(A)

be responsible for the oversight of the enterprise-wide risk management practices of the nonbank financial company supervised by the Board of Governors or bank holding company described in subsection (a), as applicable;

(B)

include such number of independent directors as the Board of Governors may determine appropriate, based on the nature of operations, size of assets, and other appropriate criteria related to the nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a), as applicable; and

(C)

include at least 1 risk management expert having experience in identifying, assessing, and managing risk exposures of large, complex firms.

(4)

Rulemaking

The Board of Governors shall issue final rules to carry out this subsection, not later than 1 year after the transfer date, to take effect not later than 15 months after the transfer date.

(h)

Stress tests

The Board of Governors shall conduct analyses in which nonbank financial companies supervised by the Board of Governors and bank holding companies described in subsection (a) are subject to evaluation of whether the companies have the capital, on a total consolidated basis, necessary to absorb losses as a result of adverse economic conditions. The Board of Governors may develop and apply such other analytic techniques as are necessary to identify, measure, and monitor risks to the financial stability of the United States.

166.

Early remediation requirements

(a)

In general

The Board of Governors, in consultation with the Council and the Corporation, shall prescribe regulations establishing requirements to provide for the early remediation of financial distress of a nonbank financial company supervised by the Board of Governors or a bank holding company described in section 165(a), except that nothing in this subsection authorizes the provision of financial assistance from the Federal Government.

(b)

Purpose of the early remediation requirements

The purpose of the early remediation requirements under subsection (a) shall be to establish a series of specific remedial actions to be taken by a nonbank financial company supervised by the Board of Governors or a bank holding company described in section 165(a) that is experiencing increasing financial distress, in order to minimize the probability that the company will become insolvent and the potential harm of such insolvency to the financial stability of the United States.

(c)

Remediation requirements

The regulations prescribed by the Board of Governors under subsection (a) shall—

(1)

define measures of the financial condition of the company, including regulatory capital, liquidity measures, and other forward-looking indicators; and

(2)

establish requirements that increase in stringency as the financial condition of the company declines, including—

(A)

requirements in the initial stages of financial decline, including limits on capital distributions, acquisitions, and asset growth; and

(B)

requirements at later stages of financial decline, including a capital restoration plan and capital-raising requirements, limits on transactions with affiliates, management changes, and asset sales.

167.

Affiliations

(a)

Affiliations

Nothing in this subtitle shall be construed to require a nonbank financial company supervised by the Board of Governors, or a company that controls a nonbank financial company supervised by the Board of Governors, to conform the activities thereof to the requirements of section 4 of the Bank Holding Company Act of 1956 (12 U.S.C. 1843).

(b)

Requirement

(1)

In general

If a nonbank financial company supervised by the Board of Governors conducts activities other than those that are determined to be financial in nature or incidental thereto under section 4(k) of the Bank Holding Company Act of 1956, the Board of Governors may require such company to establish and conduct such activities that are determined to be financial in nature or incidental thereto in an intermediate holding company established pursuant to regulation of the Board of Governors, not later than 90 days after the date on which the nonbank financial company supervised by the Board of Governors was notified of the determination under section 113(a).

(2)

Internal financial activities

For purposes of this subsection, activities that are determined to be financial in nature or incidental thereto under section 4(k) of the Bank Holding Company Act of 1956, as described in paragraph (1), shall not include internal financial activities conducted for a nonbank financial company supervised by the Board of Governors or any affiliate, including internal treasury, investment, and employee benefit functions. With respect to any internal financial activity of such company during the year prior to the date of enactment of this Act, such company may continue to engage in such activity as long as at least 2/3 of the assets or 2/3 of the revenues generated from the activity are from or attributable to such company, subject to review by the Board of Governors, to determine whether engaging in such activity presents undue risk to such company or to the financial stability of the United States.

(c)

Regulations

The Board of Governors—

(1)

shall promulgate regulations to establish the criteria for determining whether to require a nonbank financial company supervised by the Board of Governors to establish an intermediate holding company under subsection (a); and

(2)

may promulgate regulations to establish any restrictions or limitations on transactions between an intermediate holding company or a nonbank financial company supervised by the Board of Governors and its affiliates, as necessary to prevent unsafe and unsound practices in connection with transactions between such company, or any subsidiary thereof, and its parent company or affiliates that are not subsidiaries of such company, except that such regulations shall not restrict or limit any transaction in connection with the bona fide acquisition or lease by an unaffiliated person of assets, goods, or services.

168.

Regulations

Except as otherwise specified in this subtitle, not later than 18 months after the transfer date, the Board of Governors shall issue final regulations to implement this subtitle and the amendments made by this subtitle.

169.

Avoiding duplication

The Board of Governors shall take any action that the Board of Governors deems appropriate to avoid imposing requirements under this subtitle that are duplicative of requirements applicable to bank holding companies and nonbank financial companies under other provisions of law.

170.

Safe harbor

(a)

Regulations

The Board of Governors shall promulgate regulations on behalf of, and in consultation with, the Council setting forth the criteria for exempting certain types or classes of U.S. nonbank financial companies or foreign nonbank financial companies from supervision by the Board of Governors.

(b)

Considerations

In developing the criteria under subsection (a), the Board of Governors shall take into account the factors for consideration described in subsections (a) and (b) of section 113 in determining whether a U.S. nonbank financial company or foreign nonbank financial company shall be supervised by the Board of Governors.

(c)

Rule of construction

Nothing in this section shall be construed to require supervision by the Board of Governors of a U.S. nonbank financial company or foreign nonbank financial company, if such company does not meet the criteria for exemption established under subsection (a).

(d)

Update

The Board of Governors shall, in consultation with the Council, review the regulations promulgated under subsection (a), not less frequently than every 5 years, and based upon the review, the Board of Governors may revise such regulations on behalf of, and in consultation with, the Council to update as necessary the criteria set forth in such regulations.

(e)

Transition period

No revisions under subsection (d) shall take effect before the end of the 2-year period after the date of publication of such revisions in final form.

(f)

Report

The Chairperson of the Board of Governors and the Chairperson of the Council shall submit a joint report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives not later than 30 days after the date of the issuance in final form of the regulations under subsection (a), or any subsequent revision to such regulations under subsection (d), as applicable. Such report shall include, at a minimum, the rationale for exemption and empirical evidence to support the criteria for exemption.

II

Orderly liquidation authority

201.

Definitions

In this title, the following definitions shall apply:

(1)

Administrative expenses of the receiver

The term administrative expenses of the receiver includes—

(A)

the actual, necessary costs and expenses incurred by the Corporation as receiver for a covered financial company in liquidating a covered financial company; and

(B)

any obligations that the Corporation as receiver for a covered financial company determines are necessary and appropriate to facilitate the smooth and orderly liquidation of the covered financial company.

(2)

Bankruptcy code

The term Bankruptcy Code means title 11, United States Code.

(3)

Bridge financial company

The term bridge financial company means a new financial company organized by the Corporation in accordance with section 210(h) for the purpose of resolving a covered financial company.

(4)

Claim

The term claim means any right of payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.

(5)

Company

The term company has the same meaning as in section 2(b) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(b)), except that such term includes any company described in paragraph (11), the majority of the securities of which are owned by the United States or any State.

(6)

Covered broker or dealer

The term covered broker or dealer means a covered financial company that is a broker or dealer that—

(A)

is registered with the Commission under section 15(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)); and

(B)

is a member of SIPC.

(7)

Covered financial company

The term covered financial company

(A)

means a financial company for which a determination has been made under section 203(b); and

(B)

does not include an insured depository institution.

(8)

Covered subsidiary

The term covered subsidiary means a subsidiary of a covered financial company, other than—

(A)

an insured depository institution;

(B)

an insurance company; or

(C)

a covered broker or dealer.

(9)

Definitions relating to covered brokers and dealers

The terms customer, customer name securities, customer property, and net equity in the context of a covered broker or dealer, have the same meanings as in section 16 of the Securities Investor Protection Act of 1970 (15 U.S.C. 78lll).

(10)

Financial company

The term financial company means any company that—

(A)

is incorporated or organized under any provision of Federal law or the laws of any State;

(B)

is—

(i)

a bank holding company, as defined in section 2(a) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)), and including any company described in paragraph (5);

(ii)

a nonbank financial company supervised by the Board of Governors;

(iii)

any company that is predominantly engaged in activities that the Board of Governors has determined are financial in nature or incidental thereto for purposes of section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)) other than a company described in clause (i) or (ii); or

(iv)

any subsidiary of any company described in any of clauses (i) through (iii) (other than a subsidiary that is an insured depository institution or an insurance company); and

(C)

is not a Farm Credit System institution chartered under and subject to the provisions of the Farm Credit Act of 1971, as amended (12 U.S.C. 2001 et seq.).

(11)

Fund

The term Fund means the Orderly Liquidation Fund established under section 210(n).

(12)

Insurance company

The term insurance company means any entity that is—

(A)

engaged in the business of insurance;

(B)

subject to regulation by a State insurance regulator; and

(C)

covered by a State law that is designed to specifically deal with the rehabilitation, liquidation, or insolvency of an insurance company.

(13)

Nonbank financial company

The term nonbank financial company has the same meaning as in section 102(a)(4)(C).

(14)

Nonbank financial company supervised by the board of governors

The term nonbank financial company supervised by the Board of Governors has the same meaning as in section 102(a)(3)(D).

(15)

Panel

The term Panel means the Orderly Liquidation Authority Panel established under section 202.

(16)

SIPC

The term SIPC means the Securities Investor Protection Corporation.

202.

Orderly Liquidation Authority Panel

(a)

Orderly Liquidation Authority Panel

(1)

Establishment

There is established in the United States Bankruptcy Court for the District of Delaware, an Orderly Liquidation Authority Panel. The Chief Judge of the United States Bankruptcy Court for the District of Delaware shall appoint judges to the Panel, consistent with paragraph (2). In making such appointments, the Chief Judge shall consider the expertise in financial matters of each judge.

(2)

Composition

The Panel shall be composed of 3 judges from the United States Bankruptcy Court for the District of Delaware.

(3)

Jurisdiction

The Panel shall have original and exclusive jurisdiction of proceedings to consider petitions by the Secretary under subsection (b)(1).

(b)

Commencement of orderly liquidation

(1)

Petition to panel

(A)

Orderly liquidation authority panel

(i)

Petition to panel

Subsequent to a determination by the Secretary under section 203 that a financial company meets the criteria in section 203(b), the Secretary, upon notice to the Corporation and the covered financial company, shall petition the Panel for an order authorizing the Secretary to appoint the Corporation as receiver.

(ii)

Form and content of order

The Secretary shall present all relevant findings and the recommendation made pursuant to section 203(a) to the Panel. The petition shall be filed under seal.

(iii)

Determination

On a strictly confidential basis, and without any prior public disclosure, the Panel, after notice to the covered financial company and a hearing in which the covered financial company may oppose the petition, shall determine, within 24 hours of receipt of the petition filed by the Secretary, whether the determination of the Secretary that the covered financial company is in default or in danger of default is supported by substantial evidence.

(iv)

Issuance of order

If the Panel determines that the determination of the Secretary that the covered financial company is in default or in danger of default—

(I)

is supported by substantial evidence, the Panel shall issue an order immediately authorizing the Secretary to appoint the Corporation as receiver of the covered financial company; or

(II)

is not supported by substantial evidence, the Panel shall immediately provide to the Secretary a written statement of each reason supporting its determination, and afford the Secretary an immediate opportunity to amend and refile the petition under clause (i).

(B)

Effect of determination

The determination of the Panel under subparagraph (A) shall be final, and shall be subject to appeal only in accordance with paragraph (2). The decision shall not be subject to any stay or injunction pending appeal. Upon conclusion of its proceedings under subparagraph (A), the Panel shall provide immediately for the record a written statement of each reason supporting the decision of the Panel, and shall provide copies thereof to the Secretary and the covered financial company.

(C)

Criminal penalties

A person who recklessly discloses a determination of the Secretary under section 203(b) or a petition of the Secretary under subparagraph (A), or the pendency of court proceedings as provided for under subparagraph (A), shall be fined not more than $250,000, or imprisoned for not more than 5 years, or both.

(2)

Appeal of decisions of the panel

(A)

Appeal to court of appeals

(i)

In general

Subject to clause (ii), the United States Court of Appeals for the Third Circuit shall have jurisdiction of an appeal of a final decision of the Panel filed by the Secretary or a covered financial company, through its board of directors, notwithstanding section 210(a)(1)(A)(i), not later than 30 days after the date on which the decision of the Panel is rendered or deemed rendered under this subsection.

(ii)

Condition of jurisdiction

The Court of Appeals shall have jurisdiction of an appeal by a covered financial company only if the covered financial company did not acquiesce or consent to the appointment of a receiver by the Secretary under paragraph (1)(A).

(iii)

Expedition

The Court of Appeals shall consider any appeal under this subparagraph on an expedited basis.

(iv)

Scope of review

For an appeal taken under this subparagraph, review shall be limited to whether the determination of the Secretary that a covered financial company is in default or in danger of default is supported by substantial evidence.

(B)

Appeal to the supreme court

(i)

In general

A petition for a writ of certiorari to review a decision of the Court of Appeals under subparagraph (A) may be filed by the Secretary or the covered financial company, through its board of directors, notwithstanding section 210(a)(1)(A)(i), with the Supreme Court of the United States, not later than 30 days after the date of the final decision of the Court of Appeals, and the Supreme Court shall have discretionary jurisdiction to review such decision.

(ii)

Written statement

In the event of a petition under clause (i), the Court of Appeals shall immediately provide for the record a written statement of each reason for its decision.

(iii)

Expedition

The Supreme Court shall consider any petition under this subparagraph on an expedited basis.

(iv)

Scope of review

Review by the Supreme Court under this subparagraph shall be limited to whether the determination of the Secretary that the covered financial company is in default or in danger of default is supported by substantial evidence.

(c)

Establishment and transmittal of rules and procedures

(1)

In general

Not later than 6 months after the date of enactment of this Act, the Panel shall establish such rules and procedures as may be necessary to ensure the orderly conduct of proceedings, including rules and procedures to ensure that the 24-hour deadline is met and that the Secretary shall have an ongoing opportunity to amend and refile petitions under subsection (b)(1). The rules and procedures shall include provisions for the appointment of judges to the Panel, such that the composition of the Panel is established in advance of the filing of a petition under subsection (b).

(2)

Publication of rules

The rules and procedures established under paragraph (1), and any modifications of such rules and procedures, shall be recorded and shall be transmitted to—

(A)

each judge of the Panel;

(B)

the Chief Judge of the United States Bankruptcy Court for the District of Delaware;

(C)

the Committee on the Judiciary of the Senate;

(D)

the Committee on Banking, Housing, and Urban Affairs of the Senate;

(E)

the Committee on the Judiciary of the House of Representatives; and

(F)

the Committee on Financial Services of the House of Representatives.

(d)

Provisions applicable to financial companies

(1)

Bankruptcy code

Except as provided in this subsection, the provisions of the Bankruptcy Code and rules issued thereunder, and not the provisions of this title, shall apply to financial companies that are not covered financial companies for which the Corporation has been appointed as receiver.

(2)

This title

The provisions of this title shall exclusively apply to and govern all matters relating to covered financial companies for which the Corporation is appointed as receiver, and no provisions of the Bankruptcy Code or the rules issued thereunder shall apply in such cases.

(e)

Study of bankruptcy and orderly liquidation process for financial companies

(1)

Study

(A)

In general

The Administrative Office of the United States Courts and the Comptroller General of the United States shall each monitor the activities of the Panel, and each such Office shall conduct separate studies regarding the bankruptcy and orderly liquidation process for financial companies under the Bankruptcy Code.

(B)

Issues to be studied

In conducting the study under subparagraph (A), the Administrative Office of the United States Courts and the Comptroller General of the United States each shall evaluate—

(i)

the effectiveness of chapter 7 or chapter 11 of the Bankruptcy Code in facilitating the orderly liquidation or reorganization of financial companies;

(ii)

ways to maximize the efficiency and effectiveness of the Panel; and

(iii)

ways to make the orderly liquidation process under the Bankruptcy Code for financial companies more effective.

(2)

Reports

Not later than 1 year after the date of enactment of this Act, in each successive year until the third year, and every fifth year after that date of enactment, the Administrative Office of the United States Courts and the Comptroller General of the United States shall submit to the Committee on Banking, Housing, and Urban Affairs and the Committee on the Judiciary of the Senate and the Committee on Financial Services and the Committee on the Judiciary of the House of Representatives separate reports summarizing the results of the studies conducted under paragraph (1).

(f)

Study of international coordination relating to bankruptcy process for financial companies

(1)

Study

(A)

In general

The Comptroller General of the United States shall conduct a study regarding international coordination relating to the orderly liquidation of financial companies under the Bankruptcy Code.

(B)

Issues to be studied

In conducting the study under subparagraph (A), the Comptroller General of the United States shall evaluate, with respect to the bankruptcy process for financial companies—

(i)

the extent to which international coordination currently exists;

(ii)

current mechanisms and structures for facilitating international cooperation;

(iii)

barriers to effective international coordination; and

(iv)

ways to increase and make more effective international coordination.

(2)

Report

Not later than 1 year after the date of enactment of this Act, the Comptroller General of the United States shall submit to the Committee on Banking, Housing, and Urban Affairs and the Committee on the Judiciary of the Senate and the Committee on Financial Services and the Committee on the Judiciary of the House of Representatives and the Secretary a report summarizing the results of the study conducted under paragraph (1).

203.

Systemic risk determination

(a)

Written recommendation and determination

(1)

Vote required

(A)

In general

On their own initiative, or at the request of the Secretary, the Corporation and the Board of Governors shall consider whether to make a written recommendation described in paragraph (2) with respect to whether the Secretary should appoint the Corporation as receiver for a financial company. Such recommendation shall be made upon a vote of not fewer than 2/3 of the members of the Board of Governors then serving and 2/3 of the members of the board of directors of the Corporation then serving.

(B)

Cases involving covered brokers or dealers

In the case of a covered broker or dealer, or in which the largest United States subsidiary (as measured by total assets as of the end of the previous calendar quarter) of a financial company is a covered broker or dealer, the Commission and the Board of Governors, at the request of the Secretary, or on their own initiative, shall consider whether to make the written recommendation described in paragraph (2) with respect to the financial company. Subject to the requirements in paragraph (2), such recommendation shall be made upon a vote of not fewer than 2/3 of the members of the Board of Governors then serving and the members of the Commission then serving, and in consultation with the Corporation.

(2)

Recommendation required

Any written recommendation pursuant to paragraph (1) shall contain—

(A)

an evaluation of whether the financial company is in default or in danger of default;

(B)

a description of the effect that the default of the financial company would have on financial stability in the United States;

(C)

a recommendation regarding the nature and the extent of actions to be taken under this title regarding the financial company;

(D)

an evaluation of the likelihood of a private sector alternative to prevent the default of the financial company;

(E)

an evaluation of why a case under the Bankruptcy Code is not appropriate for the financial company; and

(F)

an evaluation of the effects on creditors, counterparties, and shareholders of the financial company and other market participants.

(b)

Determination by the Secretary

Notwithstanding any other provision of Federal or State law, the Secretary shall take action in accordance with section 202(b)(1)(A), if, upon the written recommendation under subsection (a), the Secretary (in consultation with the President) determines that—

(1)

the financial company is in default or in danger of default;

(2)

the failure of the financial company and its resolution under otherwise applicable Federal or State law would have serious adverse effects on financial stability in the United States;

(3)

no viable private sector alternative is available to prevent the default of the financial company;

(4)

any effect on the claims or interests of creditors, counterparties, and shareholders of the financial company and other market participants as a result of actions to be taken under this title is appropriate, given the impact that any action taken under this title would have on financial stability in the United States;

(5)

any action under section 204 would avoid or mitigate such adverse effects, taking into consideration the effectiveness of the action in mitigating potential adverse effects on the financial system, the cost to the general fund of the Treasury, and the potential to increase excessive risk taking on the part of creditors, counterparties, and shareholders in the financial company; and

(6)

a Federal regulatory agency has ordered the financial company to convert all of its convertible debt instruments that are subject to the regulatory order.

(c)

Documentation and review

(1)

In general

The Secretary shall—

(A)

document any determination under subsection (b);

(B)

retain the documentation for review under paragraph (2); and

(C)

notify the covered financial company and the Corporation of such determination.

(2)

Report to congress

Not later than 24 hours after the date of appointment of the Corporation as receiver for a covered financial company, the Secretary shall provide written notice of the recommendations and determinations reached in accordance with subsections (a) and (b) to the Majority Leader and the Minority Leader of the Senate and the Speaker and the Minority Leader of the House of Representatives, the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Committee on Financial Services of the House of Representatives, which shall consist of a summary of the basis for the determination, including, to the extent available at the time of the determination—

(A)

the size and financial condition of the covered financial company;

(B)

the sources of capital and credit support that were available to the covered financial company;

(C)

the operations of the covered financial company that could have had a significant impact on financial stability, markets, or both;

(D)

identification of the banks and financial companies which may be able to provide the services offered by the covered financial company;

(E)

any potential international ramifications of resolution of the covered financial company under other applicable insolvency law;

(F)

an estimate of the potential effect of the resolution of the covered financial company under other applicable insolvency law on the financial stability of the United States;

(G)

the potential effect of the appointment of a receiver by the Secretary on consumers;

(H)

the potential effect of the appointment of a receiver by the Secretary on the financial system, financial markets, and banks and other financial companies; and

(I)

whether resolution of the covered financial company under other applicable insolvency law would cause banks or other financial companies to experience severe liquidity distress.

(3)

Reports to Congress and the public

(A)

In general

Not later than 60 days after the date of appointment of the Corporation as receiver for a covered financial company, the Corporation, as receiver, shall—

(i)

prepare reports setting forth information on the assets and liabilities of the covered financial company as of the date of the appointment;

(ii)

file such reports with the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Committee on Financial Services of the House of Representatives; and

(iii)

publish such reports on an online website maintained by the Corporation.

(B)

Amendments

The Corporation shall, on a timely basis, not less frequently than quarterly, amend or revise and resubmit the reports prepared under this paragraph, as necessary.

(4)

Default or in danger of default

For purposes of this title, a financial company shall be considered to be in default or in danger of default if, as determined in accordance with subsection (b)—

(A)

a case has been, or likely will promptly be, commenced with respect to the financial company under the Bankruptcy Code;

(B)

the financial company has incurred, or is likely to incur, losses that will deplete all or substantially all of its capital, and there is no reasonable prospect for the company to avoid such depletion;

(C)

the assets of the financial company are, or are likely to be, less than its obligations to creditors and others; or

(D)

the financial company is, or is likely to be, unable to pay its obligations (other than those subject to a bona fide dispute) in the normal course of business.

(5)

GAO review

The Comptroller General of the United States shall review and report to Congress on any determination under subsection (b), that results in the appointment of the Corporation as receiver, including—

(A)

the basis for the determination;

(B)

the purpose for which any action was taken pursuant thereto;

(C)

the likely effect of the determination and such action on the incentives and conduct of financial companies and their creditors, counterparties, and shareholders; and

(D)

the likely disruptive effect of the determination and such action on the reasonable expectations of creditors, counterparties, and shareholders, taking into account the impact any action under this title would have on financial stability in the United States, including whether the rights of such parties will be disrupted.

(d)

Corporation policies and procedures

As soon as is practicable after the date of enactment of this Act, the Corporation shall establish policies and procedures that are acceptable to the Secretary governing the use of funds available to the Corporation to carry out this title, including the terms and conditions for the provision and use of funds under sections 204(d), 210(h)(2)(G)(iv), and 210(h)(9).

(e)

Treatment of insurance companies and insurance company subsidiaries

(1)

In general

Notwithstanding subsection (b), if an insurance company is a covered financial company or a subsidiary or affiliate of a covered financial company, the liquidation or rehabilitation of such insurance company, and any subsidiary or affiliate of such company that is not excepted under paragraph (2), shall be conducted as provided under such State law.

(2)

Exception for subsidiaries and affiliates

The requirement of paragraph (1) shall not apply with respect to any subsidiary or affiliate of an insurance company that is not itself an insurance company.

(3)

Backup authority

Notwithstanding paragraph (1), with respect to a covered financial company described in paragraph (1), if, after the end of the 60-day period beginning on the date on which a determination is made under section 202(b) with respect to such company, the appropriate regulatory agency has not filed the appropriate judicial action in the appropriate State court to place such company into orderly liquidation under the laws and requirements of the State, the Corporation shall have the authority to stand in the place of the appropriate regulatory agency and file the appropriate judicial action in the appropriate State court to place such company into orderly liquidation under the laws and requirements of the State.

204.

Orderly liquidation

(a)

Purpose of orderly liquidation authority

It is the purpose of this title to provide the necessary authority to liquidate failing financial companies that pose a significant risk to the financial stability of the United States in a manner that mitigates such risk and minimizes moral hazard. The authority provided in this title shall be exercised in the manner that best fulfills such purpose, with the strong presumption that—

(1)

creditors and shareholders will bear the losses of the financial company;

(2)

management responsible for the condition of the financial company will not be retained; and

(3)

the Corporation and other appropriate agencies will take all steps necessary and appropriate to assure that all parties, including management and third parties, having responsibility for the condition of the financial company bear losses consistent with their responsibility, including actions for damages, restitution, and recoupment of compensation and other gains not compatible with such responsibility.

(b)

Corporation as receiver

Upon the appointment of the Corporation under section 202, the Corporation shall act as the receiver for the covered financial company, with all of the rights and obligations set forth in this title.

(c)

Consultation

The Corporation, as receiver—

(1)

shall consult with the primary financial regulatory agency or agencies of the covered financial company and its covered subsidiaries for purposes of ensuring an orderly liquidation of the covered financial company;

(2)

may consult with, or under subsection (a)(1)(B)(v) or (a)(1)(L) of section 210, acquire the services of, any outside experts, as appropriate to inform and aid the Corporation in the orderly liquidation process;

(3)

shall consult with the primary financial regulatory agency or agencies of any subsidiaries of the covered financial company that are not covered subsidiaries, and coordinate with such regulators regarding the treatment of such solvent subsidiaries and the separate resolution of any such insolvent subsidiaries under other governmental authority, as appropriate; and

(4)

shall consult with the Commission and the Securities Investor Protection Corporation in the case of any covered financial company for which the Corporation has been appointed as receiver that is a broker or dealer registered with the Commission under section 15(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)) and is a member of the Securities Investor Protection Corporation, for the purpose of determining whether to transfer to a bridge financial company organized by the Corporation as receiver, without consent of any customer, customer accounts of the covered financial company.

(d)

Funding for orderly liquidation

Upon its appointment as receiver for a covered financial company, and thereafter as the Corporation may, in its discretion, determine to be necessary or appropriate, the Corporation may make available to the receivership, subject to the conditions set forth in section 206 and subject to the plan described in section 210(n)(13), funds for the orderly liquidation of the covered financial company.

205.

Orderly liquidation of covered brokers and dealers

(a)

Appointment of SIPC as trustee for protection of customer securities and property

Upon the appointment of the Corporation as receiver for any covered broker or dealer, the Corporation shall appoint, without any need for court approval, the Securities Investor Protection Corporation to act as trustee for liquidation under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.) of the covered broker or dealer.

(b)

Powers and duties of SIPC

(1)

In general

Except as provided in this section, upon its appointment as trustee for the liquidation of a covered broker or dealer, SIPC shall have all of the powers and duties provided by the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.), including, without limitation, all rights of action against third parties, but shall have no powers or duties with respect to assets and liabilities transferred by the Corporation from the covered broker or dealer to any bridge financial company established in accordance with this title.

(2)

Limitation of powers

The exercise by SIPC of powers and functions as trustee under subsection (a) shall not impair or impede the exercise of the powers and duties of the Corporation with regard to—

(A)

any action, except as otherwise provided in this title—

(i)

to make funds available under section 204(d);

(ii)

to organize, establish, operate, or terminate any bridge financial company;

(iii)

to transfer assets and liabilities;

(iv)

to enforce or repudiate contracts; or

(v)

to take any other action relating to such bridge financial company under section 210; or

(B)

determining claims under subsection (d).

(3)

Qualified financial contracts

Notwithstanding any provision of the Securities Investor Protection Act of 1970 to the contrary (including section 5(b)(2)(C) of that Act (15 U.S.C. 78eee(b)(2)(C))), the rights and obligations of any party to a qualified financial contract (as that term is defined in section 210(c)(8)) to which a covered broker or dealer described in subsection (a) is a party shall be governed exclusively by section 210, including the limitations and restrictions contained in section 210(c)(10)(B).

(c)

Limitation on court action

Except as otherwise provided in this title, no court may take any action, including any action pursuant to the Securities Investor Protection Act of 1970 or the Bankruptcy Code, to restrain or affect the exercise of powers or functions of the Corporation as receiver for a covered broker or dealer and any claims against the Corporation as such receiver shall be determined in accordance with subsection (e) and such claims shall be limited to money damages.

(d)

Actions by corporation as receiver

(1)

In general

Notwithstanding any other provision of this title, no action taken by the Corporation, as receiver with respect to a covered broker or dealer, shall—

(A)

adversely affect the rights of a customer to customer property or customer name securities;

(B)

diminish the amount or timely payment of net equity claims of customers; or

(C)

otherwise impair the recoveries provided to a customer under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.).

(2)

net proceeds

The net proceeds from any transfer, sale, or disposition of assets by the Corporation as receiver for the covered broker or dealer shall be for the benefit of the estate of the covered broker or dealer, as provided in this title.

(e)

Claims against the corporation as receiver

Any claim against the Corporation as receiver for a covered broker or dealer for assets transferred to a bridge financial company established with respect to such covered broker or dealer—

(1)

shall be determined in accordance with section 210(a)(2); and

(2)

may be reviewed by the appropriate district or territorial court of the United States in accordance with section 210(a)(5).

(f)

Satisfaction of customer claims

(1)

Obligations to customers

Notwithstanding any other provision of this title, all obligations of a covered broker or dealer or of any bridge financial company established with respect to such covered broker or dealer to a customer relating to, or net equity claims based upon, customer property shall be promptly discharged by the delivery of securities or the making of payments to or for the account of such customer, in a manner and in an amount at least as beneficial to the customer as would have been the case had the covered broker or dealer been subject to a proceeding under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.) without the appointment of the Corporation as receiver, and with a filing date as of the date on which the Corporation is appointed as receiver.

(2)

Satisfaction of claims by SIPC

SIPC, as trustee for a covered broker or dealer, shall satisfy customer claims in the manner and amount provided under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.), as if the appointment of the Corporation as receiver had not occurred, and with a filing date as of the date on which the Corporation is appointed as receiver. The Corporation shall satisfy customer claims, to the extent that a customer would have received more securities or cash with respect to the allocation of customer property had the covered financial company been subject to a proceeding under the Securities Investor Protection Act (15 U.S.C. 78aaa et seq.) without the appointment of the Corporation as receiver, and with a filing date as of the date on which the Corporation is appointed as receiver.

(g)

Priorities

(1)

Customer property

As trustee for a covered broker or dealer, SIPC shall allocate customer property and deliver customer name securities in accordance with section 8(c) of the Securities Investor Protection Act of 1970 (15 U.S.C. 78fff–2(c)).

(2)

Other claims

All claims other than those described in paragraph (1) (including any unpaid claim by a customer for the allowed net equity claim of such customer from customer property) shall be paid in accordance with the priorities in section 210(b).

(h)

Rulemaking

The Commission and the Corporation, after consultation with SIPC, shall jointly issue rules to implement this section.

206.

Mandatory terms and conditions for all orderly liquidation actions

In taking action under this title, the Corporation shall—

(1)

determine that such action is necessary for purposes of the financial stability of the United States, and not for the purpose of preserving the covered financial company;

(2)

ensure that the shareholders of a covered financial company do not receive payment until after all other claims and the Fund are fully paid;

(3)

ensure that unsecured creditors bear losses in accordance with the priority of claim provisions in section 210;

(4)

ensure that management responsible for the failed condition of the covered financial company is removed (if such management has not already been removed at the time at which the Corporation is appointed receiver); and

(5)

not take an equity interest in or become a shareholder of any covered financial company or any covered subsidiary.

207.

Directors not liable for acquiescing in appointment of receiver

The members of the board of directors (or body performing similar functions) of a covered financial company shall not be liable to the shareholders or creditors thereof for acquiescing in or consenting in good faith to the appointment of the Corporation as receiver for the covered financial company under section 203.

208.

Dismissal and exclusion of other actions

(a)

In general

Effective as of the date of the appointment of the Corporation as receiver for the covered financial company under section 202 or the appointment of SIPC as trustee for a covered broker or dealer under section 205, as applicable, any case or proceeding commenced with respect to the covered financial company under the Bankruptcy Code or the Securities Investor Protection Act of 1970 shall be dismissed, upon notice to the Bankruptcy Court (with respect to a case commenced under the Bankruptcy Code), and upon notice to SIPC (with respect to a covered broker or dealer) and no such case or proceeding may be commenced with respect to a covered financial company at any time while the orderly liquidation is pending.

(b)

Revesting of assets

Effective as of the date of appointment of the Corporation as receiver, the assets of a covered financial company shall, to the extent they have vested in any entity other than the covered financial company as a result of any case or proceeding commenced with respect to the covered financial company under the Bankruptcy Code, the Securities Investor Protection Act of 1970, or any similar provision of State liquidation or insolvency law applicable to the covered financial company, revest in the covered financial company.

(c)

Limitation

Notwithstanding subsections (a) and (b), any order entered or other relief granted by a bankruptcy court prior to the date of appointment of the Corporation as receiver shall continue with the same validity as if an orderly liquidation had not been commenced.

209.

Rulemaking; non-conflicting law

The Corporation shall, in consultation with the Council, prescribe such rules or regulations as the Corporation considers necessary or appropriate to implement this title, including rules and regulations with respect to the rights, interests, and priorities of creditors, counterparties, security entitlement holders, or other persons with respect to any covered financial company or any assets or other property of or held by such covered financial company. To the extent possible, the Corporation shall seek to harmonize applicable rules and regulations promulgated under this section with the insolvency laws that would otherwise apply to a covered financial company.

210.

Powers and duties of the corporation

(a)

Powers and authorities

(1)

General powers

(A)

Successor to covered financial company

The Corporation shall, upon appointment as receiver for a covered financial company under this title, succeed to—

(i)

all rights, titles, powers, and privileges of the covered financial company and its assets, and of any stockholder, member, officer, or director of such company; and

(ii)

title to the books, records, and assets of any previous receiver or other legal custodian of such covered financial company.

(B)

Operation of the covered financial company during the period of orderly liquidation

The Corporation, as receiver for a covered financial company, may—

(i)

take over the assets of and operate the covered financial company with all of the powers of the members or shareholders, the directors, and the officers of the covered financial company, and conduct all business of the covered financial company;

(ii)

collect all obligations and money owed to the covered financial company;

(iii)

perform all functions of the covered financial company, in the name of the covered financial company;

(iv)

manage the assets and property of the covered financial company, consistent with maximization of the value of the assets in the context of the orderly liquidation; and

(v)

provide by contract for assistance in fulfilling any function, activity, action, or duty of the Corporation as receiver.

(C)

Functions of covered financial company officers, directors, and shareholders

(i)

In general

The Corporation may provide for the exercise of any function by any member or stockholder, director, or officer of any covered financial company for which the Corporation has been appointed as receiver under this title.

(ii)

Presumption

There shall be a strong presumption that the Corporation, as receiver for a covered financial company, will remove management responsible for the failed condition of the covered financial company.

(D)

Additional powers as receiver

The Corporation shall, as receiver for a covered financial company, and subject to all legally enforceable and perfected security interests and all legally enforceable security entitlements in respect of assets held by the covered financial company, liquidate, and wind-up the affairs of a covered financial company, including taking steps to realize upon the assets of the covered financial company, in such manner as the Corporation deems appropriate, including through the sale of assets, the transfer of assets to a bridge financial company established under subsection (h), or the exercise of any other rights or privileges granted to the receiver under this section.

(E)

Additional powers with respect to failing subsidiaries of a covered financial company

(i)

In general

In any case in which a receiver is appointed for a covered financial company under section 202, the Corporation may appoint itself as receiver of any subsidiary (other than an insured depository institution, any covered broker or dealer, or an insurance company) of the covered financial company that is organized under Federal law or the laws of any State, if the Corporation and the Secretary jointly determine that—

(I)

the subsidiary is in default or in danger of default;

(II)

such action would avoid or mitigate serious adverse effects on the financial stability or economic conditions of the United States; and

(III)

such action would facilitate the orderly liquidation of the covered financial company.

(ii)

Treatment as covered financial company

If the Corporation is appointed as receiver of a subsidiary of a covered financial company under clause (i), the subsidiary shall thereafter be considered a covered financial company under this title, and the Corporation shall thereafter have all the powers and rights with respect to that subsidiary as it has with respect to a covered financial company under this title.

(F)

Organization of bridge companies

The Corporation, as receiver for a covered financial company, may organize a bridge financial company under subsection (h).

(G)

Merger; transfer of assets and liabilities

(i)

In general

Subject to clauses (ii) and (iii), the Corporation, as receiver for a covered financial company, may—

(I)

merge the covered financial company with another company; or

(II)

transfer any asset or liability of the covered financial company (including any assets and liabilities held by the covered financial company for security entitlement holders, any customer property, or any assets and liabilities associated with any trust or custody business) without obtaining any approval, assignment, or consent with respect to such transfer.

(ii)

Federal agency approval; antitrust review

With respect to a transaction described in clause (i)(I) that requires approval by a Federal agency—

(I)

the transaction may not be consummated before the 5th calendar day after the date of approval by the Federal agency responsible for such approval;

(II)

if, in connection with any such approval, a report on competitive factors is required, the Federal agency responsible for such approval shall promptly notify the Attorney General of the United States of the proposed transaction, and the Attorney General shall provide the required report not later than 10 days after the date of the request; and

(III)

if notification under section 7A of the Clayton Act is required with respect to such transaction, then the required waiting period shall end on the 15th day after the date on which the Attorney General and the Federal Trade Commission receive such notification, unless the waiting period is terminated earlier under subsection (b)(2) of such section 7A, or is extended pursuant to subsection (e)(2) of such section 7A.

(iii)

Setoff

Subject to the other provisions of this title, any transferee of assets from a receiver, including a bridge financial company, shall be subject to such claims or rights as would prevail over the rights of such transferee in such assets under applicable noninsolvency law.

(H)

Payment of valid obligations

The Corporation, as receiver for a covered financial company, shall, to the extent that funds are available, pay all valid obligations of the covered financial company that are due and payable at the time of the appointment of the Corporation as receiver, in accordance with the prescriptions and limitations of this title.

(I)

Applicable noninsolvency law

Except as may otherwise be provided in this title, the applicable noninsolvency law shall be determined by the noninsolvency choice of law rules otherwise applicable to the claims, rights, titles, persons, or entities at issue.

(J)

Subpoena authority

(i)

In general

The Corporation, as receiver for a covered financial company, may, for purposes of carrying out any power, authority, or duty with respect to the covered financial company (including determining any claim against the covered financial company and determining and realizing upon any asset of any person in the course of collecting money due the covered financial company), exercise any power established under section 8(n) of the Federal Deposit Insurance Act, as if the Corporation were the appropriate Federal banking agency for the covered financial company, and the covered financial company were an insured depository institution.

(ii)

Rule of construction

This subparagraph may not be construed as limiting any rights that the Corporation, in any capacity, might otherwise have to exercise any powers described in clause (i) or under any other provision of law.

(K)

Incidental powers

The Corporation, as receiver for a covered financial company, may exercise all powers and authorities specifically granted to receivers under this title, and such incidental powers as shall be necessary to carry out such powers under this title.

(L)

Utilization of private sector

In carrying out its responsibilities in the management and disposition of assets from the covered financial company, the Corporation, as receiver for a covered financial company, may utilize the services of private persons, including real estate and loan portfolio asset management, property management, auction marketing, legal, and brokerage services, if such services are available in the private sector, and the Corporation determines that utilization of such services is practicable, efficient, and cost effective.

(M)

Shareholders and creditors of covered financial company

Notwithstanding any other provision of law, the Corporation, as receiver for a covered financial company, shall succeed by operation of law to the rights, titles, powers, and privileges described in subparagraph (A), and shall terminate all rights and claims that the stockholders and creditors of the covered financial company may have against the assets of the covered financial company or the Corporation arising out of their status as stockholders or creditors, except for their right to payment, resolution, or other satisfaction of their claims, as permitted under this section. The Corporation shall ensure that shareholders and unsecured creditors bear losses, consistent with the priority of claims provisions under this section.

(N)

Coordination with foreign financial authorities

The Corporation, as receiver for a covered financial company, shall coordinate, to the maximum extent possible, with the appropriate foreign financial authorities regarding the orderly liquidation of any covered financial company that has assets or operations in a country other than the United States.

(O)

Restriction on transfers to bridge financial company

(i)

Section of accounts for transfer

If the Corporation establishes one or more bridge financial companies with respect to a covered broker or dealer, the Corporation shall transfer to a bridge financial company, all customer accounts of the covered financial company, unless the Corporation, after consulting with the Commission and SIPC, determines that—

(I)

the customer accounts are likely to be promptly transferred to another covered broker or dealer; or

(II)

the transfer of the accounts to a bridge financial company would materially interfere with the ability of the Corporation to avoid or mitigate serious adverse effects on financial stability or economic conditions in the United States.

(ii)

Transfer of property

SIPC, as trustee for the liquidation of the covered broker or dealer, and the Commission, shall provide any and all reasonable assistance necessary to complete such transfers by the Corporation.

(iii)

Customer consent and court approval not required

Neither customer consent nor court approval shall be required to transfer any customer accounts and associated customer property to a bridge financial company in accordance with this section.

(iv)

Notification of sipc and sharing of information

The Corporation shall identify to SIPC the customer accounts and associated customer property transferred to the bridge financial company. The Corporation and SIPC shall cooperate in the sharing of any information necessary for each entity to discharge its obligations under this title and under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.) including by providing access to the books and records of the covered financial company and any bridge financial company established in accordance with this title.

(2)

Determination of claims

(A)

In general

The Corporation, as receiver for a covered financial company, shall report on claims, as set forth in section 203(c)(3). Subject to paragraph (4) of this subsection, the Corporation, as receiver for a covered financial company, shall determine claims in accordance with the requirements of this subsection and regulations prescribed under section 209.

(B)

Notice requirements

The Corporation, as receiver for a covered financial company, in any case involving the liquidation or winding up of the affairs of a covered financial company, shall—

(i)

promptly publish a notice to the creditors of the covered financial company to present their claims, together with proof, to the receiver by a date specified in the notice, which shall be not earlier than 90 days after the date of publication of such notice; and

(ii)

republish such notice 1 month and 2 months, respectively, after the date of publication under clause (i).

(C)

Mailing required

The Corporation as receiver shall mail a notice similar to the notice published under clause (i) or (ii) of subparagraph (B), at the time of such publication, to any creditor shown on the books and records of the covered financial company—

(i)

at the last address of the creditor appearing in such books;

(ii)

in any claim filed by the claimant; or

(iii)

upon discovery of the name and address of a claimant not appearing on the books and records of the covered financial company, not later than 30 days after the date of the discovery of such name and address.

(3)

Procedures for resolution of claims

(A)

Decision period

(i)

In general

Prior to the 180th day after the date on which a claim against a covered financial company is filed with the Corporation as receiver, or such later date as may be agreed as provided in clause (ii), the Corporation shall notify the claimant whether it accepts or objects to the claim, in accordance with subparagraphs (B), (C), and (D).

(ii)

Extension of time

By written agreement executed not later than 180 days after the date on which a claim against a covered financial company is filed with the Corporation, the period described in clause (i) may be extended by written agreement between the claimant and the Corporation. Failure to notify the claimant of any disallowance within the time period set forth in clause (i), as it may be extended by agreement under this clause, shall be deemed to be a disallowance of such claim, and the claimant may file or continue an action in court, as provided in paragraph (4).

(iii)

Mailing of notice sufficient

The requirements of clause (i) shall be deemed to be satisfied if the notice of any decision with respect to any claim is mailed to the last address of the claimant which appears—

(I)

on the books, records, or both of the covered financial company;

(II)

in the claim filed by the claimant; or

(III)

in documents submitted in proof of the claim.

(iv)

Contents of notice of disallowance

If the Corporation as receiver objects to any claim filed under clause (i), the notice to the claimant shall contain—

(I)

a statement of each reason for the disallowance; and

(II)

the procedures required to file or continue an action in court, as provided in paragraph (4).

(B)

Allowance of proven claim

The receiver shall allow any claim received by the receiver on or before the date specified in the notice under paragraph (2)(B)(i), which is proved to the satisfaction of the receiver.

(C)

Disallowance of claims filed after end of filing period

(i)

In general

Except as provided in clause (ii), claims filed after the date specified in the notice published under paragraph (2)(B)(i) shall be disallowed, and such disallowance shall be final.

(ii)

Certain exceptions

Clause (i) shall not apply with respect to any claim filed by a claimant after the date specified in the notice published under paragraph (2)(B)(i), and such claim may be considered by the receiver under subparagraph (B), if—

(I)

the claimant did not receive notice of the appointment of the receiver in time to file such claim before such date; and

(II)

such claim is filed in time to permit payment of such claim.

(D)

Authority to disallow claims

(i)

In general

The Corporation may object to any portion of any claim by a creditor or claim of a security, preference, setoff, or priority which is not proved to the satisfaction of the Corporation.

(ii)

Payments to undersecured creditors

In the case of a claim against a covered financial company that is secured by any property or other asset of such covered financial company, the receiver—

(I)

may treat the portion of such claim which exceeds an amount equal to the fair market value of such property or other asset as an unsecured claim; and

(II)

may not make any payment with respect to such unsecured portion of the claim, other than in connection with the disposition of all claims of unsecured creditors of the covered financial company.

(iii)

Exceptions

No provision of this paragraph shall apply with respect to—

(I)

any extension of credit from any Federal reserve bank, or the Corporation, to any covered financial company; or

(II)

subject to clause (ii), any legally enforceable and perfected security interest in the assets of the covered financial company securing any such extension of credit.

(E)

Legal effect of filing

(i)

Statute of limitations tolled

For purposes of any applicable statute of limitations, the filing of a claim with the receiver shall constitute a commencement of an action.

(ii)

No prejudice to other actions

Subject to paragraph (8), the filing of a claim with the receiver shall not prejudice any right of the claimant to continue any action which was filed before the date of appointment of the receiver for the covered financial company.

(4)

Judicial determination of claims

(A)

In general

Subject to subparagraph (B), a claimant may file suit on a claim (or continue an action commenced before the date of appointment of the Corporation as receiver) in the district or territorial court of the United States for the district within which the principal place of business of the covered financial company is located (and such court shall have jurisdiction to hear such claim).

(B)

Timing

A claim under subparagraph (A) may be filed before the end of the 60-day period beginning on the earlier of—

(i)

the end of the period described in paragraph (3)(A)(i) (or, if extended by agreement of the Corporation and the claimant, the period described in paragraph (3)(A)(ii)) with respect to any claim against a covered financial company for which the Corporation is receiver; or

(ii)

the date of any notice of disallowance of such claim pursuant to paragraph (3)(A)(i).

(C)

Statute of limitations

If any claimant fails to file suit on such claim (or to continue an action on such claim commenced before the date of appointment of the Corporation as receiver) prior to the end of the 60-day period described in subparagraph (B), the claim shall be deemed to be disallowed (other than any portion of such claim which was allowed by the receiver) as of the end of such period, such disallowance shall be final, and the claimant shall have no further rights or remedies with respect to such claim.

(5)

Expedited determination of claims

(A)

Procedure required

The Corporation shall establish a procedure for expedited relief outside of the claims process established under paragraph (3), for any claimant that alleges—

(i)

the existence of a legally valid and enforceable or perfected security interest in property of a covered financial company, or is an entitlement holder that has obtained control of any legally valid and enforceable security entitlement in respect of any asset held by the covered financial company for which the Corporation has been appointed receiver; and

(ii)

that irreparable injury will occur if the claims procedure established under paragraph (3) is followed.

(B)

Determination period

Prior to the end of the 90-day period beginning on the date on which a claim is filed in accordance with the procedures established pursuant to subparagraph (A), the Corporation shall—

(i)

determine—

(I)

whether to allow or disallow such claim, or any portion thereof; or

(II)

whether such claim should be determined pursuant to the procedures established pursuant to paragraph (3);

(ii)

notify the claimant of the determination; and

(iii)

if the claim is disallowed, provide a statement of each reason for the disallowance and the procedure for obtaining a judicial determination.

(C)

Period for filing or renewing suit

Any claimant who files a request for expedited relief shall be permitted to file suit (or continue a suit filed before the date of appointment of the Corporation as receiver seeking a determination of the rights of the claimant with respect to such security interest (or such security entitlement) after the earlier of—

(i)

the end of the 90-day period beginning on the date of the filing of a request for expedited relief; or

(ii)

the date on which the Corporation denies the claim or a portion thereof.

(D)

Statute of limitations

If an action described in subparagraph (C) is not filed, or the motion to renew a previously filed suit is not made, before the end of the 30-day period beginning on the date on which such action or motion may be filed in accordance with subparagraph (C), the claim shall be deemed to be disallowed as of the end of such period (other than any portion of such claim which was allowed by the receiver), such disallowance shall be final, and the claimant shall have no further rights or remedies with respect to such claim.

(E)

Legal effect of filing

(i)

Statute of limitations tolled

For purposes of any applicable statute of limitations, the filing of a claim with the receiver shall constitute a commencement of an action.

(ii)

No prejudice to other actions

Subject to paragraph (8), the filing of a claim with the receiver shall not prejudice any right of the claimant to continue any action which was filed before the appointment of the Corporation as receiver for the covered financial company.

(6)

Agreements against interest of the receiver

No agreement that tends to diminish or defeat the interest of the Corporation as receiver in any asset acquired by the receiver under this section shall be valid against the receiver, unless such agreement—

(A)

is in writing;

(B)

was executed by an authorized officer or representative of the covered financial company, or confirmed in the ordinary course of business by the covered financial company; and

(C)

has been, since the time of its execution, an official record of the company or the party claiming under the agreement provides documentation, acceptable to the receiver, of such agreement and its authorized execution or confirmation by the covered financial company.

(7)

Payment of claims

(A)

In general

Subject to subparagraph (B), the Corporation as receiver may, in its discretion and to the extent that funds are available, pay creditor claims, in such manner and amounts as are authorized under this section, which are—

(i)

allowed by the receiver;

(ii)

approved by the receiver pursuant to a final determination pursuant to paragraph (3) or (5), as applicable; or

(iii)

determined by the final judgment of a court of competent jurisdiction.

(B)

Limitation

A creditor shall, in no event, receive less than the amount that the creditor is entitled to receive under paragraphs (2) and (3) of subsection (d), as applicable.

(C)

Payment of dividends on claims

The Corporation as receiver may, in its sole discretion, and to the extent otherwise permitted by this section, pay dividends on proven claims at any time, and no liability shall attach to the Corporation as receiver, by reason of any such payment or for failure to pay dividends to a claimant whose claim is not proved at the time of any such payment.

(D)

Rulemaking by the corporation

The Corporation may prescribe such rules, including definitions of terms, as the Corporation deems appropriate to establish an interest rate for or to make payments of post-insolvency interest to creditors holding proven claims against the receivership estate of a covered financial company, except that no such interest shall be paid until the Corporation as receiver has satisfied the principal amount of all creditor claims.

(8)

Suspension of legal actions

(A)

In general

After the appointment of the Corporation as receiver for a covered financial company, the Corporation may request a stay in any judicial action or proceeding in which such covered financial company is or becomes a party, for a period of not to exceed 90 days.

(B)

Grant of stay by all courts required

Upon receipt of a request by the Corporation pursuant to subparagraph (A), the court shall grant such stay as to all parties.

(9)

Additional rights and duties

(A)

Prior final adjudication

The Corporation shall abide by any final, non-appealable judgment of any court of competent jurisdiction that was rendered before the appointment of the Corporation as receiver.

(B)

Rights and remedies of receiver

In the event of any appealable judgment, the Corporation as receiver shall—

(i)

have all the rights and remedies available to the covered financial company (before the date of appointment of the Corporation as receiver under section 202) and the Corporation, including removal to Federal court and all appellate rights; and

(ii)

not be required to post any bond in order to pursue such remedies.

(C)

No attachment or execution

No attachment or execution may be issued by any court upon assets in the possession of the Corporation as receiver for a covered financial company.

(D)

Limitation on judicial review

Except as otherwise provided in this title, no court shall have jurisdiction over—

(i)

any claim or action for payment from, or any action seeking a determination of rights with respect to, the assets of any covered financial company for which the Corporation has been appointed receiver, including any assets which the Corporation may acquire from itself as such receiver; or

(ii)

any claim relating to any act or omission of such covered financial company or the Corporation as receiver.

(E)

Disposition of assets

In exercising any right, power, privilege, or authority as receiver in connection with any covered financial company for which the Corporation is acting as receiver under this section, the Corporation shall, to the greatest extent practicable, conduct its operations in a manner that—

(i)

maximizes the net present value return from the sale or disposition of such assets;

(ii)

minimizes the amount of any loss realized in the resolution of cases;

(iii)

mitigates the potential for serious adverse effects to the financial system;

(iv)

ensures timely and adequate competition and fair and consistent treatment of offerors; and

(v)

prohibits discrimination on the basis of race, sex, or ethnic group in the solicitation and consideration of offers.

(10)

Statute of limitations for actions brought by receiver

(A)

In general

Notwithstanding any provision of any contract, the applicable statute of limitations with regard to any action brought by the Corporation as receiver for a covered financial company shall be—

(i)

in the case of any contract claim, the longer of—

(I)

the 6-year period beginning on the date on which the claim accrues; or

(II)

the period applicable under State law; and

(ii)

in the case of any tort claim, the longer of—

(I)

the 3-year period beginning on the date on which the claim accrues; or

(II)

the period applicable under State law.

(B)

Date on which a claim accrues

For purposes of subparagraph (A), the date on which the statute of limitations begins to run on any claim described in subparagraph (A) shall be the later of—

(i)

the date of the appointment of the Corporation as receiver under this title; or

(ii)

the date on which the cause of action accrues.

(C)

Revival of expired State causes of action

(i)

In general

In the case of any tort claim described in clause (ii) for which the applicable statute of limitations under State law has expired not more than 5 years before the date of appointment of the Corporation as receiver for a covered financial company, the Corporation may bring an action as receiver on such claim without regard to the expiration of the statute of limitations.

(ii)

Claims described

A tort claim referred to in clause (i) is a claim arising from fraud, intentional misconduct resulting in unjust enrichment, or intentional misconduct resulting in substantial loss to the covered financial company.

(11)

Avoidable transfers

(A)

Fraudulent transfers

The Corporation, as receiver for any covered financial company, may avoid a transfer of any interest of the covered financial company in property, or any obligation incurred by the covered financial company, that was made or incurred at or within 2 years before the time of commencement, if—

(i)

the covered financial company voluntarily or involuntarily—

(I)

made such transfer or incurred such obligation with actual intent to hinder, delay, or defraud any entity to which the covered financial company was or became, on or after the date on which such transfer was made or such obligation was incurred, indebted; or

(II)

received less than a reasonably equivalent value in exchange for such transferor obligation; and

(ii)

the covered financial company voluntarily or involuntarily—

(I)

was insolvent on the date that such transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or obligation;

(II)

was engaged in business or a transaction, or was about to engage in business or a transaction, for which any property remaining with the covered financial company was an unreasonably small capital;

(III)

intended to incur, or believed that the covered financial company would incur, debts that would be beyond the ability of the covered financial company to pay as such debts matured; or

(IV)

made such transfer to or for the benefit of an insider, or incurred such obligation to or for the benefit of an insider, under an employment contract and not in the ordinary course of business.

(B)

Preferential transfers

The Corporation as receiver for any covered financial company may avoid a transfer of an interest of the covered financial company in property—

(i)

to or for the benefit of a creditor;

(ii)

for or on account of an antecedent debt that was owed by the covered financial company before the transfer was made;

(iii)

that was made while the covered financial company was insolvent;

(iv)

that was made—

(I)

90 days or less before the date on which the Corporation was appointed receiver; or

(II)

more than 90 days, but less than 1 year before the date on which the Corporation was appointed receiver, if such creditor at the time of the transfer was an insider; and

(v)

that enables the creditor to receive more than the creditor would receive if—

(I)

the covered financial company had been liquidated under chapter 7 of the Bankruptcy Code;

(II)

the transfer had not been made; and

(III)

the creditor received payment of such debt to the extent provided by the provisions of chapter 7 of the Bankruptcy Code.

(C)

Post-receivership transactions

The Corporation as receiver for any covered financial company may avoid a transfer of property of the receivership that occurred after the Corporation was appointed receiver that was not authorized under this title by the Corporation as receiver.

(D)

Right of recovery

To the extent that a transfer is avoided under subparagraph (A), (B), or (C), the Corporation may recover, for the benefit of the covered financial company, the property transferred or, if a court so orders, the value of such property (at the time of such transfer) from—

(i)

the initial transferee of such transfer or the person for whose benefit such transfer was made; or

(ii)

any immediate or mediate transferee of any such initial transferee.

(E)

Rights of transferee or obligee

The Corporation may not recover under subparagraph (D)(ii) from—

(i)

any transferee that takes for value, including in satisfaction of or to secure a present or antecedent debt, in good faith, and without knowledge of the voidability of the transfer avoided; or

(ii)

any immediate or mediate good faith transferee of such transferee.

(F)

Defenses

Subject to the other provisions of this title—

(i)

a transferee or obligee from which the Corporation seeks to recover a transfer or to avoid an obligation under subparagraph (A), (B), (C), or (D) shall have the same defenses available to a transferee or obligee from which a trustee seeks to recover a transfer or avoid an obligation under; and

(ii)

the authority of the Corporation to recover a transfer or avoid an obligation shall be subject to subsections (b) and (c) of section 546, section 547(c), and section 548(c) of the Bankruptcy Code.

(G)

Rights under this section

The rights of the Corporation as receiver under this section shall be superior to any rights of a trustee or any other party (other than a Federal agency) under the Bankruptcy Code.

(H)

Rules of construction; definitions

For purposes of—

(i)

subparagraphs (A) and (B)—

(I)

the term insider has the same meaning as in section 101(31) of the Bankruptcy Code;

(II)

a transfer is made when such transfer is so perfected that a bona fide purchaser from the covered financial company against whom applicable law permits such transfer to be perfected cannot acquire an interest in the property transferred that is superior to the interest in such property of the transferee, but if such transfer is not so perfected before the date on which the Corporation is appointed as receiver for the covered financial company, such transfer is made immediately before the date of such appointment; and

(III)

the term value means property, or satisfaction or securing of a present or antecedent debt of the covered financial company, but does not include an unperformed promise to furnish support to the covered financial company; and

(ii)

subparagraph (B)—

(I)

the covered financial company is presumed to have been insolvent on and during the 90-day period immediately preceding the date of appointment of the Corporation as receiver; and

(II)

the term insolvent has the same meaning as in section 101(32) of the Bankruptcy Code.

(12)

Setoff

(A)

Generally

Except as otherwise provided in this title, any right of a creditor to offset a mutual debt owed by the creditor to any covered financial company that arose before the Corporation was appointed as receiver for the covered financial company against a claim of such creditor may be asserted if enforceable under applicable noninsolvency law, except to the extent that—

(i)

the claim of the creditor against the covered financial company is disallowed;

(ii)

the claim was transferred, by an entity other than the covered financial company, to the creditor—

(I)

after the Corporation was appointed as receiver of the covered financial company; or

(II)
(aa)

after the 90-day period preceding the date on which the Corporation was appointed as receiver for the covered financial company; and

(bb)

while the covered financial company was insolvent (except for a setoff in connection with a qualified financial contract); or

(iii)

the debt owed to the covered financial company was incurred by the covered financial company—

(I)

after the 90-day period preceding the date on which the Corporation was appointed as receiver for the covered financial company;

(II)

while the covered financial company was insolvent; and

(III)

for the purpose of obtaining a right of setoff against the covered financial company (except for a setoff in connection with a qualified financial contract).

(B)

Insufficiency

(i)

In general

Except with respect to a setoff in connection with a qualified financial contract, if a creditor offsets a mutual debt owed to the covered financial company against a claim of the covered financial company on or within the 90-day period preceding the date on which the Corporation is appointed as receiver for the covered financial company, the Corporation may recover from the creditor the amount so offset, to the extent that any insufficiency on the date of such setoff is less than the insufficiency on the later of—

(I)

the date that is 90 days before the date on which the Corporation is appointed as receiver for the covered financial company; or

(II)

the first day on which there is an insufficiency during the 90-day period preceding the date on which the Corporation is appointed as receiver for the covered financial company.

(ii)

Definition of insufficiency

In this subparagraph, the term insufficiency means the amount, if any, by which a claim against the covered financial company exceeds a mutual debt owed to the covered financial company by the holder of such claim.

(C)

Insolvency

The term insolvent has the same meaning as in section 101(32) of the Bankruptcy Code.

(D)

Presumption of insolvency

For purposes of this paragraph, the covered financial company is presumed to have been insolvent on and during the 90-day period preceding the date of appointment of the Corporation as receiver.

(E)

Limitation

Nothing in this paragraph (12) shall be the basis for any right of setoff where no such right exists under applicable noninsolvency law.

(F)

Priority claim

Except as otherwise provided in this title, the Corporation as receiver for the covered financial company may sell or transfer any assets free and clear of the setoff rights of any party, except that such party shall be entitled to a claim, subordinate to the claims payable under subparagraphs (A), (B), and (C) of subsection (b)(1), but senior to all other unsecured liabilities defined in subsection (b)(1)(D), in an amount equal to the value of such setoff rights.

(13)

Attachment of assets and other injunctive relief

Subject to paragraph (14), any court of competent jurisdiction may, at the request of the Corporation as receiver for a covered financial company, issue an order in accordance with Rule 65 of the Federal Rules of Civil Procedure, including an order placing the assets of any person designated by the Corporation under the control of the court and appointing a trustee to hold such assets.

(14)

Standards

(A)

Showing

Rule 65 of the Federal Rules of Civil Procedure shall apply with respect to any proceeding under paragraph (13), without regard to the requirement that the applicant show that the injury, loss, or damage is irreparable and immediate.

(B)

State proceeding

If, in the case of any proceeding in a State court, the court determines that rules of civil procedure available under the laws of the State provide substantially similar protections of the right of the parties to due process as provided under Rule 65 (as modified with respect to such proceeding by subparagraph (A)), the relief sought by the Corporation pursuant to paragraph (14) may be requested under the laws of such State.

(15)

Treatment of claims arising from breach of contracts executed by the corporation as receiver

Notwithstanding any other provision of this title, any final and non-appealable judgment for monetary damages entered against the Corporation as receiver for a covered financial company for the breach of an agreement executed or approved by the Corporation after the date of its appointment shall be paid as an administrative expense of the receiver. Nothing in this paragraph shall be construed to limit the power of a receiver to exercise any rights under contract or law, including to terminate, breach, cancel, or otherwise discontinue such agreement.

(16)

Accounting and recordkeeping requirements

(A)

In general

The Corporation as receiver for a covered financial company shall, consistent with the accounting and reporting practices and procedures established by the Corporation, maintain a full accounting of each receivership or other disposition of any covered financial company.

(B)

Annual accounting or report

With respect to each receivership to which the Corporation is appointed, the Corporation shall make an annual accounting or report, as appropriate, available to the Secretary and the Comptroller General of the United States.

(C)

Availability of reports

Any report prepared pursuant to subparagraph (B) and section 203(c)(3) shall be made available to the public by the Corporation.

(D)

Recordkeeping requirement

(i)

In general

The Corporation shall prescribe such regulations and establish such retention schedules as are necessary to maintain the documents and records of the Corporation generated in exercising the authorities of this title and the records of a covered financial company for which the Corporation is appointed receiver, with due regard for—

(I)

the avoidance of duplicative record retention; and

(II)

the expected evidentiary needs of the Corporation as receiver for a covered financial company and the public regarding the records of covered financial companies.

(ii)

Retention of records

Unless otherwise required by applicable Federal law or court order, the Corporation may not, at any time, destroy any records that are subject to clause (i).

(iii)

Records defined

As used in this subparagraph, the terms records and records of a covered financial company mean any document, book, paper, map, photograph, microfiche, microfilm, computer or electronically-created record generated or maintained by the covered financial company in the course of and necessary to its transaction of business.

(b)

Priority of expenses and unsecured claims

(1)

In general

Unsecured claims against a covered financial company, or the Corporation as receiver for such covered financial company under this section, that are proven to the satisfaction of the receiver shall have priority in the following order:

(A)

Administrative expenses of the receiver.

(B)

Any amounts owed to the United States, unless the United States agrees or consents otherwise.

(C)

Any other general or senior liability of the covered financial company (which is not a liability described under subparagraph (D) or (E)).

(D)

Any obligation subordinated to general creditors (which is not an obligation described under subparagraph (E)).

(E)

Any obligation to shareholders, members, general partners, limited partners, or other persons, with interests in the equity of the covered financial company arising as a result of their status as shareholders, members, general partners, limited partners, or other persons with interests in the equity of the covered financial company.

(2)

Post-receivership financing priority

In the event that the Corporation, as receiver for a covered financial company, is unable to obtain unsecured credit for the covered financial company from commercial sources, the Corporation as receiver may obtain credit or incur debt on the part of the covered financial company, which shall have priority over any or all administrative expenses of the receiver under paragraph (1)(A).

(3)

Claims of the United States

Unsecured claims of the United States shall, at a minimum, have a higher priority than liabilities of the covered financial company that count as regulatory capital.

(4)

Creditors similarly situated

All claimants of a covered financial company that are similarly situated under paragraph (1) shall be treated in a similar manner, except that the Corporation as receiver may take any action (including making payments, subject to subsection (o)(1)(E)(ii)) that does not comply with this subsection, if—

(A)

the Corporation determines that such action is necessary—

(i)

to maximize the value of the assets of the covered financial company;

(ii)

to maximize the present value return from the sale or other disposition of the assets of the covered financial company; or

(iii)

to minimize the amount of any loss realized upon the sale or other disposition of the assets of the covered financial company; and

(B)

all claimants that are similarly situated under paragraph (1) receive not less than the amount provided in paragraphs (2) and (3) of subsection (d).

(5)

Secured claims unaffected

This section shall not affect secured claims or security entitlements in respect of assets or property held by the covered financial company, except to the extent that the security is insufficient to satisfy the claim, and then only with regard to the difference between the claim and the amount realized from the security.

(6)

Priority of expenses and unsecured claims in the orderly liquidation of sipc member

Where the Corporation is appointed as receiver for a covered broker or dealer, unsecured claims against such covered broker or dealer, or the Corporation as receiver for such covered broker or dealer under this section, that are proven to the satisfaction of the receiver under section 205(e), shall have the priority prescribed in paragraph (1), except that—

(A)

SIPC shall be entitled to recover administrative expenses incurred in performing its responsibilities under section 205 on an equal basis with the Corporation, in accordance with paragraph (1)(A);

(B)

the Corporation shall be entitled to recover any amounts paid to customers or to SIPC pursuant to section 205(f), in accordance with paragraph (1)(B);

(C)

SIPC shall be entitled to recover any amounts paid out of the SIPC Fund to meet its obligations under section 205 and under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.), which claim shall be subordinate to the claims payable under subparagraphs (A) and (B) of paragraph (1), but senior to all other claims; and

(D)

the Corporation may, after paying any proven claims to customers under section 205 and the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.), and as provided above, pay dividends on other proven claims, in its discretion, and to the extent that funds are available, in accordance with the priorities set forth in paragraph (1).

(c)

Provisions relating to contracts entered into before appointment of receiver

(1)

Authority to repudiate contracts

In addition to any other rights that a receiver may have, the Corporation as receiver for any covered financial company may disaffirm or repudiate any contract or lease—

(A)

to which the covered financial company is a party;

(B)

the performance of which the Corporation as receiver, in the discretion of the Corporation, determines to be burdensome; and

(C)

the disaffirmance or repudiation of which the Corporation as receiver determines, in the discretion of the Corporation, will promote the orderly administration of the affairs of the covered financial company.

(2)

Timing of repudiation

The Corporation, as receiver for any covered financial company, shall determine whether or not to exercise the rights of repudiation under this section within a reasonable period of time.

(3)

Claims for damages for repudiation

(A)

In general

Except as provided in paragraphs (4), (5), and (6) and in subparagraphs (C), (D), and (E) of this paragraph, the liability of the Corporation as receiver for a covered financial company for the disaffirmance or repudiation of any contract pursuant to paragraph (1) shall be—

(i)

limited to actual direct compensatory damages; and

(ii)

determined as of—

(I)

the date of the appointment of the Corporation as receiver; or

(II)

in the case of any contract or agreement referred to in paragraph (8), the date of the disaffirmance or repudiation of such contract or agreement.

(B)

No liability for other damages

For purposes of subparagraph (A), the term actual direct compensatory damages does not include—

(i)

punitive or exemplary damages;

(ii)

damages for lost profits or opportunity; or

(iii)

damages for pain and suffering.

(C)

Measure of damages for repudiation of qualified financial contracts

In the case of any qualified financial contract or agreement to which paragraph (8) applies, compensatory damages shall be—

(i)

deemed to include normal and reasonable costs of cover or other reasonable measures of damages utilized in the industries for such contract and agreement claims; and

(ii)

paid in accordance with this paragraph and subsection (d), except as otherwise specifically provided in this subsection.

(D)

Measure of damages for repudiation or disaffirmance of debt obligation

In the case of any debt for borrowed money or evidenced by a security, actual direct compensatory damages shall be no less than the amount lent plus accrued interest plus any accreted original issue discount as of the date the Corporation was appointed receiver of the covered financial company and, to the extent that an allowed secured claim is secured by property the value of which is greater than the amount of such claim and any accrued interest through the date of repudiation or disaffirmance, such accrued interest pursuant to paragraph (1).

(E)

Measure of damages for repudiation or disaffirmance of contingent obligation

In the case of any contingent obligation of a covered financial company consisting of any obligation under a guarantee, letter of credit, loan commitment, or similar credit obligation, the Corporation may, by rule or regulation, prescribe that actual direct compensatory damages shall be no less than the estimated value of the claim as of the date the Corporation was appointed receiver of the covered financial company, as such value is measured based on the likelihood that such contingent claim would become fixed and the probable magnitude thereof.

(4)

Leases under which the covered financial company is the lessee

(A)

In general

If the Corporation as receiver disaffirms or repudiates a lease under which the covered financial company is the lessee, the receiver shall not be liable for any damages (other than damages determined pursuant to subparagraph (B)) for the disaffirmance or repudiation of such lease.

(B)

Payments of rent

Notwithstanding subparagraph (A), the lessor under a lease to which subparagraph (A) would otherwise apply shall—

(i)

be entitled to the contractual rent accruing before the later of the date on which—

(I)

the notice of disaffirmance or repudiation is mailed; or

(II)

the disaffirmance or repudiation becomes effective, unless the lessor is in default or breach of the terms of the lease;

(ii)

have no claim for damages under any acceleration clause or other penalty provision in the lease; and

(iii)

have a claim for any unpaid rent, subject to all appropriate offsets and defenses, due as of the date of the appointment which shall be paid in accordance with this paragraph and subsection (d).

(5)

Leases under which the covered financial company is the lessor

(A)

In general

If the Corporation as receiver for a covered financial company repudiates an unexpired written lease of real property of the covered financial company under which the covered financial company is the lessor and the lessee is not, as of the date of such repudiation, in default, the lessee under such lease may either—

(i)

treat the lease as terminated by such repudiation; or

(ii)

remain in possession of the leasehold interest for the balance of the term of the lease, unless the lessee defaults under the terms of the lease after the date of such repudiation.

(B)

Provisions applicable to lessee remaining in possession

If any lessee under a lease described in subparagraph (A) remains in possession of a leasehold interest pursuant to clause (ii) of subparagraph (A)—

(i)

the lessee—

(I)

shall continue to pay the contractual rent pursuant to the terms of the lease after the date of the repudiation of such lease; and

(II)

may offset against any rent payment which accrues after the date of the repudiation of the lease, any damages which accrue after such date due to the nonperformance of any obligation of the covered financial company under the lease after such date; and

(ii)

the Corporation as receiver shall not be liable to the lessee for any damages arising after such date as a result of the repudiation, other than the amount of any offset allowed under clause (i)(II).

(6)

Contracts for the sale of real property

(A)

In general

If the receiver repudiates any contract (which meets the requirements of subsection (a)(6)) for the sale of real property, and the purchaser of such real property under such contract is in possession and is not, as of the date of such repudiation, in default, such purchaser may either—

(i)

treat the contract as terminated by such repudiation; or

(ii)

remain in possession of such real property.

(B)

Provisions applicable to purchaser remaining in possession

If any purchaser of real property under any contract described in subparagraph (A) remains in possession of such property pursuant to clause (ii) of subparagraph (A)—

(i)

the purchaser—

(I)

shall continue to make all payments due under the contract after the date of the repudiation of the contract; and

(II)

may offset against any such payments any damages which accrue after such date due to the nonperformance (after such date) of any obligation of the covered financial company under the contract; and

(ii)

the Corporation as receiver shall—

(I)

not be liable to the purchaser for any damages arising after such date as a result of the repudiation, other than the amount of any offset allowed under clause (i)(II);

(II)

deliver title to the purchaser in accordance with the provisions of the contract; and

(III)

have no obligation under the contract other than the performance required under subclause (II).

(C)

Assignment and sale allowed

(i)

In general

No provision of this paragraph shall be construed as limiting the right of the Corporation as receiver to assign the contract described in subparagraph (A) and sell the property, subject to the contract and the provisions of this paragraph.

(ii)

No liability after assignment and sale

If an assignment and sale described in clause (i) is consummated, the Corporation as receiver shall have no further liability under the contract described in subparagraph (A) or with respect to the real property which was the subject of such contract.

(7)

Provisions applicable to service contracts

(A)

Services performed before appointment

In the case of any contract for services between any person and any covered financial company for which the Corporation has been appointed receiver, any claim of such person for services performed before the date of appointment shall be—

(i)

a claim to be paid in accordance with subsections (a), (b), and (d); and

(ii)

deemed to have arisen as of the date on which the receiver was appointed.

(B)

Services performed after appointment and prior to repudiation

If, in the case of any contract for services described in subparagraph (A), the Corporation as receiver accepts performance by the other person before making any determination to exercise the right of repudiation of such contract under this section—

(i)

the other party shall be paid under the terms of the contract for the services performed; and

(ii)

the amount of such payment shall be treated as an administrative expense of the receivership.

(C)

Acceptance of performance no bar to subsequent repudiation

The acceptance by the Corporation as receiver for services referred to in subparagraph (B) in connection with a contract described in subparagraph (B) shall not affect the right of the Corporation as receiver to repudiate such contract under this section at any time after such performance.

(8)

Certain qualified financial contracts

(A)

Rights of parties to contracts

Subject to subsection (a)(8) and paragraphs (9) and (10) of this subsection, and notwithstanding any other provision of this section, any other provision of Federal law, or the law of any State, no person shall be stayed or prohibited from exercising—

(i)

any right that such person has to cause the termination, liquidation, or acceleration of any qualified financial contract with a covered financial company which arises upon the date of appointment of the Corporation as receiver for such covered financial company at any time after such appointment;

(ii)

any right under any security agreement or arrangement or other credit enhancement related to one or more qualified financial contracts described in clause (i); or

(iii)

any right to offset or net out any termination value, payment amount, or other transfer obligation arising under or in connection with 1 or more contracts or agreements described in clause (i), including any master agreement for such contracts or agreements.

(B)

Applicability of other provisions

Subsection (a)(8) shall apply in the case of any judicial action or proceeding brought against the Corporation as receiver referred to in subparagraph (A), or the subject covered financial company, by any party to a contract or agreement described in subparagraph (A)(i) with such covered financial company.

(C)

Certain transfers not avoidable

(i)

In general

Notwithstanding subsection (a)(11), (a)(12), or (c)(12), section 5242 of the Revised Statutes of the United States, or any other provision of Federal or State law relating to the avoidance of preferential or fraudulent transfers, the Corporation, whether acting as the Corporation or as receiver for a covered financial company, may not avoid any transfer of money or other property in connection with any qualified financial contract with a covered financial company.

(ii)

Exception for certain transfers

Clause (i) shall not apply to any transfer of money or other property in connection with any qualified financial contract with a covered financial company if the transferee had actual intent to hinder, delay, or defraud such company, the creditors of such company, or the Corporation as receiver appointed for such company.

(D)

Certain contracts and agreements defined

For purposes of this subsection, the following definitions shall apply:

(i)

Qualified financial contract

The term qualified financial contract means any securities contract, commodity contract, forward contract, repurchase agreement, swap agreement, and any similar agreement that the Corporation determines by regulation, resolution, or order to be a qualified financial contract for purposes of this paragraph.

(ii)

Securities contract

The term securities contract

(I)

means a contract for the purchase, sale, or loan of a security, a certificate of deposit, a mortgage loan, any interest in a mortgage loan, a group or index of securities, certificates of deposit, or mortgage loans or interests therein (including any interest therein or based on the value thereof), or any option on any of the foregoing, including any option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option, and including any repurchase or reverse repurchase transaction on any such security, certificate of deposit, mortgage loan, interest, group or index, or option (whether or not such repurchase or reverse repurchase transaction is a repurchase agreement, as defined in clause (v));

(II)

does not include any purchase, sale, or repurchase obligation under a participation in a commercial mortgage loan unless the Corporation determines by regulation, resolution, or order to include any such agreement within the meaning of such term;

(III)

means any option entered into on a national securities exchange relating to foreign currencies;

(IV)

means the guarantee (including by novation) by or to any securities clearing agency of any settlement of cash, securities, certificates of deposit, mortgage loans or interests therein, group or index of securities, certificates of deposit or mortgage loans or interests therein (including any interest therein or based on the value thereof) or an option on any of the foregoing, including any option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option (whether or not such settlement is in connection with any agreement or transaction referred to in subclauses (I) through (XII) (other than subclause (II)));

(V)

means any margin loan;

(VI)

means any extension of credit for the clearance or settlement of securities transactions;

(VII)

means any loan transaction coupled with a securities collar transaction, any prepaid securities forward transaction, or any total return swap transaction coupled with a securities sale transaction;

(VIII)

means any other agreement or transaction that is similar to any agreement or transaction referred to in this clause;

(IX)

means any combination of the agreements or transactions referred to in this clause;

(X)

means any option to enter into any agreement or transaction referred to in this clause;

(XI)

means a master agreement that provides for an agreement or transaction referred to in any of subclauses (I) through (X), other than subclause (II), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a securities contract under this clause, except that the master agreement shall be considered to be a securities contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in any of subclauses (I) through (X), other than subclause (II); and

(XII)

means any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in this clause, including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause.

(iii)

Commodity contract

The term commodity contract means—

(I)

with respect to a futures commission merchant, a contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade;

(II)

with respect to a foreign futures commission merchant, a foreign future;

(III)

with respect to a leverage transaction merchant, a leverage transaction;

(IV)

with respect to a clearing organization, a contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization, or commodity option traded on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization;

(V)

with respect to a commodity options dealer, a commodity option;

(VI)

any other agreement or transaction that is similar to any agreement or transaction referred to in this clause;

(VII)

any combination of the agreements or transactions referred to in this clause;

(VIII)

any option to enter into any agreement or transaction referred to in this clause;

(IX)

a master agreement that provides for an agreement or transaction referred to in any of subclauses (I) through (VIII), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a commodity contract under this clause, except that the master agreement shall be considered to be a commodity contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in any of subclauses (I) through (VIII); or

(X)

any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in this clause, including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause.

(iv)

Forward contract

The term forward contract means—

(I)

a contract (other than a commodity contract) for the purchase, sale, or transfer of a commodity or any similar good, article, service, right, or interest which is presently or in the future becomes the subject of dealing in the forward contract trade, or product or byproduct thereof, with a maturity date that is more than 10 days after the date on which the contract is entered into, including a repurchase or reverse repurchase transaction (whether or not such repurchase or reverse repurchase transaction is a repurchase agreement, as defined in clause (v)), consignment, lease, swap, hedge transaction, deposit, loan, option, allocated transaction, unallocated transaction, or any other similar agreement;

(II)

any combination of agreements or transactions referred to in subclauses (I) and (III);

(III)

any option to enter into any agreement or transaction referred to in subclause (I) or (II);

(IV)

a master agreement that provides for an agreement or transaction referred to in subclause (I), (II), or (III), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a forward contract under this clause, except that the master agreement shall be considered to be a forward contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), or (III); or

(V)

any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in subclause (I), (II), (III), or (IV), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause.

(v)

Repurchase agreement

The term repurchase agreement (which definition also applies to a reverse repurchase agreement)—

(I)

means an agreement, including related terms, which provides for the transfer of one or more certificates of deposit, mortgage related securities (as such term is defined in section 3 of the Securities Exchange Act of 1934), mortgage loans, interests in mortgage-related securities or mortgage loans, eligible bankers’ acceptances, qualified foreign government securities (which, for purposes of this clause, means a security that is a direct obligation of, or that is fully guaranteed by, the central government of a member of the Organization for Economic Cooperation and Development, as determined by regulation or order adopted by the Board of Governors), or securities that are direct obligations of, or that are fully guaranteed by, the United States or any agency of the United States against the transfer of funds by the transferee of such certificates of deposit, eligible bankers’ acceptances, securities, mortgage loans, or interests with a simultaneous agreement by such transferee to transfer to the transferor thereof certificates of deposit, eligible bankers’ acceptances, securities, mortgage loans, or interests as described above, at a date certain not later than 1 year after such transfers or on demand, against the transfer of funds, or any other similar agreement;

(II)

does not include any repurchase obligation under a participation in a commercial mortgage loan, unless the Corporation determines, by regulation, resolution, or order to include any such participation within the meaning of such term;

(III)

means any combination of agreements or transactions referred to in subclauses (I) and (IV);

(IV)

means any option to enter into any agreement or transaction referred to in subclause (I) or (III);

(V)

means a master agreement that provides for an agreement or transaction referred to in subclause (I), (III), or (IV), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a repurchase agreement under this clause, except that the master agreement shall be considered to be a repurchase agreement under this subclause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (III), or (IV); and

(VI)

means any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in subclause (I), (III), (IV), or (V), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause.

(vi)

Swap agreement

The term swap agreement means—

(I)

any agreement, including the terms and conditions incorporated by reference in any such agreement, which is an interest rate swap, option, future, or forward agreement, including a rate floor, rate cap, rate collar, cross-currency rate swap, and basis swap; a spot, same day-tomorrow, tomorrow-next, forward, or other foreign exchange, precious metals, or other commodity agreement; a currency swap, option, future, or forward agreement; an equity index or equity swap, option, future, or forward agreement; a debt index or debt swap, option, future, or forward agreement; a total return, credit spread or credit swap, option, future, or forward agreement; a commodity index or commodity swap, option, future, or forward agreement; weather swap, option, future, or forward agreement; an emissions swap, option, future, or forward agreement; or an inflation swap, option, future, or forward agreement;

(II)

any agreement or transaction that is similar to any other agreement or transaction referred to in this clause and that is of a type that has been, is presently, or in the future becomes, the subject of recurrent dealings in the swap or other derivatives markets (including terms and conditions incorporated by reference in such agreement) and that is a forward, swap, future, option, or spot transaction on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, quantitative measures associated with an occurrence, extent of an occurrence, or contingency associated with a financial, commercial, or economic consequence, or economic or financial indices or measures of economic or financial risk or value;

(III)

any combination of agreements or transactions referred to in this clause;

(IV)

any option to enter into any agreement or transaction referred to in this clause;

(V)

a master agreement that provides for an agreement or transaction referred to in subclause (I), (II), (III), or (IV), together with all supplements to any such master agreement, without regard to whether the master agreement contains an agreement or transaction that is not a swap agreement under this clause, except that the master agreement shall be considered to be a swap agreement under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), (III), or (IV); and

(VI)

any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in any of clauses (I) through (V), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such clause.

(vii)

Definitions relating to default

When used in this paragraph and paragraph (10)—

(I)

the term default means, with respect to a covered financial company, any adjudication or other official decision by any court of competent jurisdiction, or other public authority pursuant to which the Corporation has been appointed receiver; and

(II)

the term in danger of default means a covered financial company with respect to which the Corporation or appropriate State authority has determined that—

(aa)

in the opinion of the Corporation or such authority—

(AA)

the covered financial company is not likely to be able to pay its obligations in the normal course of business; and

(BB)

there is no reasonable prospect that the covered financial company will be able to pay such obligations without Federal assistance; or

(bb)

in the opinion of the Corporation or such authority—

(AA)

the covered financial company has incurred or is likely to incur losses that will deplete all or substantially all of its capital; and

(BB)

there is no reasonable prospect that the capital will be replenished without Federal assistance.

(viii)

Treatment of master agreement as one agreement

Any master agreement for any contract or agreement described in any of clauses (i) through (vi) (or any master agreement for such master agreement or agreements), together with all supplements to such master agreement, shall be treated as a single agreement and a single qualified financial contact. If a master agreement contains provisions relating to agreements or transactions that are not themselves qualified financial contracts, the master agreement shall be deemed to be a qualified financial contract only with respect to those transactions that are themselves qualified financial contracts.

(ix)

Transfer

The term transfer means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with property or with an interest in property, including retention of title as a security interest and foreclosure of the equity of redemption of the covered financial company.

(x)

Person

The term person includes any governmental entity in addition to any entity included in the definition of such term in section 1, title 1, United States Code.

(E)

Clarification

No provision of law shall be construed as limiting the right or power of the Corporation, or authorizing any court or agency to limit or delay, in any manner, the right or power of the Corporation to transfer any qualified financial contract in accordance with paragraphs (9) and (10) of this subsection or to disaffirm or repudiate any such contract in accordance with subsection (c)(1).

(F)

Walkaway clauses not effective

(i)

In general

Notwithstanding the provisions of subparagraph (A) of this paragraph and sections 403 and 404 of the Federal Deposit Insurance Corporation Improvement Act of 1991, no walkaway clause shall be enforceable in a qualified financial contract of a covered financial company in default.

(ii)

Limited suspension of certain obligations

In the case of a qualified financial contract referred to in clause (i), any payment or delivery obligations otherwise due from a party pursuant to the qualified financial contract shall be suspended from the time at which the Corporation is appointed as receiver until the earlier of—

(I)

the time at which such party receives notice that such contract has been transferred pursuant to paragraph (10)(A); or

(II)

5:00 p.m. (eastern time) on the 5th business day following the date of the appointment of the Corporation as receiver.

(iii)

Walkaway clause defined

For purposes of this subparagraph, the term walkaway clause means any provision in a qualified financial contract that suspends, conditions, or extinguishes a payment obligation of a party, in whole or in part, or does not create a payment obligation of a party that would otherwise exist, solely because of the status of such party as a nondefaulting party in connection with the insolvency of a covered financial company that is a party to the contract or the appointment of or the exercise of rights or powers by the Corporation as receiver for such covered financial company, and not as a result of the exercise by a party of any right to offset, setoff, or net obligations that exist under the contract, any other contract between those parties, or applicable law.

(iv)

Certain obligations to clearing organizations

In the event that the Corporation has been appointed as receiver for a covered financial company which is a party to any qualified financial contract cleared by or subject to the rules of a clearing organization (as defined in subsection (c)(9)(D)), the receiver shall use its best efforts to meet all margin, collateral, and settlement obligations of the covered financial company that arise under qualified financial contracts (other than any margin, collateral, or settlement obligation that is not enforceable against the receiver under paragraph (8)(F)(i) or paragraph (10)(B)), as required by the rules of the clearing organization when due, and such obligations shall not be suspended pursuant to paragraph (8)(F)(ii). Notwithstanding paragraph (8)(F)(ii) or (10)(B), if the receiver fails to satisfy any such margin, collateral, or settlement obligations under the rules of the clearing organization, the clearing organization shall have the immediate right to exercise, and shall not be stayed from exercising, all of its rights and remedies under its rules and applicable law with respect to any qualified financial contract of the covered financial company, including, without limitation, the right to liquidate all positions and collateral of such covered financial company under the company's qualified financial contracts, and suspend or cease to act for such covered financial company, all in accordance with the rules of the clearing organization.

(G)

Recordkeeping

(i)

Joint rulemaking

The Federal primary financial regulatory agencies shall jointly prescribe regulations requiring that financial companies maintain such records with respect to qualified financial contracts (including market valuations) that the Federal primary financial regulatory agencies determine to be necessary or appropriate in order to assist the Corporation as receiver for a covered financial company in being able to exercise its rights and fulfill its obligations under this paragraph or paragraph (9) or (10).

(ii)

Timeframe

The Federal primary financial regulatory agencies shall prescribe joint final or interim final regulations not later than 24 months after the date of enactment of this Act.

(iii)

Back-Up rulemaking authority

If the Federal primary financial regulatory agencies do not prescribe joint final or interim final regulations within the time frame in clause (ii), the Chairperson of the Council shall prescribe, in consultation with the Corporation, the regulations required by clause (i).

(iv)

Categorization and tiering

The joint regulations prescribed under clause (i) shall, as appropriate, differentiate among financial companies by taking into consideration their size, risk, complexity, leverage, frequency and dollar amount of qualified financial contracts, interconnectedness to the financial system, and any other factors deemed appropriate.

(9)

Transfer of qualified financial contracts

(A)

In general

In making any transfer of assets or liabilities of a covered financial company in default, which includes any qualified financial contract, the Corporation as receiver for such covered financial company shall either—

(i)

transfer to one financial institution, other than a financial institution for which a conservator, receiver, trustee in bankruptcy, or other legal custodian has been appointed or which is otherwise the subject of a bankruptcy or insolvency proceeding—

(I)

all qualified financial contracts between any person or any affiliate of such person and the covered financial company in default;

(II)

all claims of such person or any affiliate of such person against such covered financial company under any such contract (other than any claim which, under the terms of any such contract, is subordinated to the claims of general unsecured creditors of such company);

(III)

all claims of such covered financial company against such person or any affiliate of such person under any such contract; and

(IV)

all property securing or any other credit enhancement for any contract described in subclause (I) or any claim described in subclause (II) or (III) under any such contract; or

(ii)

transfer none of the qualified financial contracts, claims, property or other credit enhancement referred to in clause (i) (with respect to such person and any affiliate of such person).

(B)

Transfer to foreign bank, financial institution, or branch or agency thereof

In transferring any qualified financial contracts and related claims and property under subparagraph (A)(i), the Corporation as receiver for the covered financial company shall not make such transfer to a foreign bank, financial institution organized under the laws of a foreign country, or a branch or agency of a foreign bank or financial institution unless, under the law applicable to such bank, financial institution, branch or agency, to the qualified financial contracts, and to any netting contract, any security agreement or arrangement or other credit enhancement related to one or more qualified financial contracts, the contractual rights of the parties to such qualified financial contracts, netting contracts, security agreements or arrangements, or other credit enhancements are enforceable substantially to the same extent as permitted under this section.

(C)

Transfer of contracts subject to the rules of a clearing organization

In the event that the Corporation as receiver for a financial institution transfers any qualified financial contract and related claims, property, or credit enhancement pursuant to subparagraph (A)(i) and such contract is cleared by or subject to the rules of a clearing organization, the clearing organization shall not be required to accept the transferee as a member by virtue of the transfer.

(D)

Definitions

For purposes of this paragraph—

(i)

the term financial institution means a broker or dealer, a depository institution, a futures commission merchant, a bridge financial company, or any other institution determined by the Corporation, by regulation, to be a financial institution; and

(ii)

the term clearing organization has the same meaning as in section 402 of the Federal Deposit Insurance Corporation Improvement Act of 1991.

(10)

Notification of transfer

(A)

In general

(i)

Notice

The Corporation shall provide notice in accordance with clause (ii), if—

(I)

the Corporation as receiver for a covered financial company in default or in danger of default transfers any assets or liabilities of the covered financial company; and

(II)

the transfer includes any qualified financial contract.

(ii)

Timing

The Corporation as receiver for a covered financial company shall notify any person who is a party to any contract described in clause (i) of such transfer not later than 5:00 p.m. (eastern time) on the 5th business day following the date of the appointment of the Corporation as receiver.

(B)

Certain rights not enforceable

(i)

Receivership

A person who is a party to a qualified financial contract with a covered financial company may not exercise any right that such person has to terminate, liquidate, or net such contract under paragraph (8)(A) solely by reason of or incidental to the appointment under this section of the Corporation as receiver for the covered financial company (or the insolvency or financial condition of the covered financial company for which the Corporation has been appointed as receiver)—

(I)

until 5:00 p.m. (eastern time) on the 5th business day following the date of the appointment; or

(II)

after the person has received notice that the contract has been transferred pursuant to paragraph (9)(A).

(ii)

Notice

For purposes of this paragraph, the Corporation as receiver for a covered financial company shall be deemed to have notified a person who is a party to a qualified financial contract with such covered financial company, if the Corporation has taken steps reasonably calculated to provide notice to such person by the time specified in subparagraph (A).

(C)

Treatment of bridge financial company

For purposes of paragraph (9), a bridge financial company shall not be considered to be a covered financial company for which a conservator, receiver, trustee in bankruptcy, or other legal custodian has been appointed, or which is otherwise the subject of a bankruptcy or insolvency proceeding.

(D)

Business day defined

For purposes of this paragraph, the term business day means any day other than any Saturday, Sunday, or any day on which either the New York Stock Exchange or the Federal Reserve Bank of New York is closed.

(11)

Disaffirmance or repudiation of qualified financial contracts

In exercising the rights of disaffirmance or repudiation of the Corporation as receiver with respect to any qualified financial contract to which a covered financial company is a party, the Corporation shall either—

(A)

disaffirm or repudiate all qualified financial contracts between—

(i)

any person or any affiliate of such person; and

(ii)

the covered financial company in default; or

(B)

disaffirm or repudiate none of the qualified financial contracts referred to in subparagraph (A) (with respect to such person or any affiliate of such person).

(12)

Certain security and customer interests not avoidable

No provision of this subsection shall be construed as permitting the avoidance of any—

(A)

legally enforceable or perfected security interest in any of the assets of any covered financial company, except in accordance with subsection (a)(11); or

(B)

legally enforceable interest in customer property, security entitlements in respect of assets or property held by the covered financial company for any security entitlement holder.

(13)

Authority to enforce contracts

(A)

In general

The Corporation, as receiver for a covered financial company, may enforce any contract, other than a liability insurance contract of a director or officer, a financial institution bond entered into by the covered financial company, notwithstanding any provision of the contract providing for termination, default, acceleration, or exercise of rights upon, or solely by reason of, insolvency, the appointment of or the exercise of rights or powers by the Corporation as receiver, the filing of the petition pursuant to section 202(c)(1), or the issuance of the recommendations or determination, or any actions or events occurring in connection therewith or as a result thereof, pursuant to section 203.

(B)

Certain rights not affected

No provision of this paragraph may be construed as impairing or affecting any right of the Corporation as receiver to enforce or recover under a liability insurance contract of a director or officer or financial institution bond under other applicable law.

(C)

Consent requirement and ipso facto clauses

(i)

In general

Except as otherwise provided by this section, no person may exercise any right or power to terminate, accelerate, or declare a default under any contract to which the covered financial company is a party (and no provision in any such contract providing for such default, termination, or acceleration shall be enforceable), or to obtain possession of or exercise control over any property of the covered financial company or affect any contractual rights of the covered financial company, without the consent of the Corporation as receiver for the covered financial company during the 90 day period beginning from the appointment of the Corporation as receiver.

(ii)

Exceptions

No provision of this subparagraph shall apply to a director or officer liability insurance contract or a financial institution bond, to the rights of parties to certain qualified financial contracts pursuant to paragraph (8), or to the rights of parties to netting contracts pursuant to subtitle A of title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 4401 et seq.), or shall be construed as permitting the Corporation as receiver to fail to comply with otherwise enforceable provisions of such contract.

(D)

Contracts to extend credit

Notwithstanding any other provision in this title, if the Corporation as receiver enforces any contract to extend credit to the covered financial company or bridge financial company, any valid and enforceable obligation to repay such debt shall be paid by the Corporation as receiver, as an administrative expense of the receivership.

(14)

Exception for Federal reserve banks and corporation security interest

No provision of this subsection shall apply with respect to—

(A)

any extension of credit from any Federal reserve bank or the Corporation to any covered financial company; or

(B)

any security interest in the assets of the covered financial company securing any such extension of credit.

(15)

Savings clause

The meanings of terms used in this subsection are applicable for purposes of this subsection only, and shall not be construed or applied so as to challenge or affect the characterization, definition, or treatment of any similar terms under any other statute, regulation, or rule, including the Gramm-Leach-Bliley Act, the Legal Certainty for Bank Products Act of 2000, the securities laws (as that term is defined in section 3(a)(47) of the Securities Exchange Act of 1934), and the Commodity Exchange Act.

(16)

Enforcement of contracts guaranteed by the covered financial company

(A)

In General

The Corporation, as receiver for a covered financial company or as receiver for a subsidiary of a covered financial company (including an insured depository institution) shall have the power to enforce contracts of subsidiaries or affiliates of the covered financial company, the obligations under which are guaranteed or otherwise supported by or linked to the covered financial company, notwithstanding any contractual right to cause the termination, liquidation, or acceleration of such contracts based solely on the insolvency, financial condition, or receivership of the covered financial company, if—

(i)

such guaranty or other support and all related assets and liabilities are transferred to and assumed by a bridge financial company or a third party (other than a third party for which a conservator, receiver, trustee in bankruptcy, or other legal custodian has been appointed, or which is otherwise the subject of a bankruptcy or insolvency proceeding) within the same period of time as the Corporation is entitled to transfer the qualified financial contracts of such covered financial company; or

(ii)

the Corporation, as receiver, otherwise provides adequate protection with respect to such obligations.

(B)

Rule of construction

For purposes of this paragraph, a bridge financial company shall not be considered to be a third party for which a conservator, receiver, trustee in bankruptcy, or other legal custodian has been appointed, or which is otherwise the subject of a bankruptcy or insolvency proceeding.

(d)

Valuation of claims in default

(1)

In general

Notwithstanding any other provision of Federal law or the law of any State, and regardless of the method utilized by the Corporation for a covered financial company, including transactions authorized under subsection (h), this subsection shall govern the rights of the creditors of any such covered financial company.

(2)

Maximum liability

The maximum liability of the Corporation, acting as receiver for a covered financial company or in any other capacity, to any person having a claim against the Corporation as receiver or the covered financial company for which the Corporation is appointed shall equal the amount that such claimant would have received if—

(A)

the Corporation had not been appointed receiver with respect to the covered financial company; and

(B)

the covered financial company had been liquidated under chapter 7 of the Bankruptcy Code, or any similar provision of State insolvency law applicable to the covered financial company.

(3)

Special provision for orderly liquidation by sipc

The maximum liability of the Corporation, acting as receiver or in its corporate capacity for any covered broker or dealer to any customer of such covered broker or dealer, with respect to customer property of such customer, shall be—

(A)

equal to the amount that such customer would have received with respect to such customer property in a case initiated by SIPC under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.); and

(B)

determined as of the close of business on the date on which the Corporation is appointed as receiver.

(4)

Additional payments authorized

(A)

In general

Subject to subsection (o)(1)(E)(ii), the Corporation, with the approval of the Secretary, may make additional payments or credit additional amounts to or with respect to or for the account of any claimant or category of claimants of the covered financial company, if the Corporation determines that such payments or credits are necessary or appropriate to minimize losses to the Corporation as receiver from the orderly liquidation of the covered financial company under this section.

(B)

Limitation

Notwithstanding any other provision of Federal or State law, or the constitution of any State, the Corporation shall not be obligated, as a result of having made any payment under subparagraph (A) or credited any amount described in subparagraph (A) to or with respect to or for the account of any claimant or category of claimants, to make payments to any other claimant or category of claimants.

(C)

Manner of payment

The Corporation may make payments or credit amounts under subparagraph (A) directly to the claimants or may make such payments or credit such amounts to a company other than a covered financial company or a bridge financial company established with respect thereto in order to induce such other company to accept liability for such claims.

(e)

Limitation on court action

Except as provided in this title, no court may take any action to restrain or affect the exercise of powers or functions of the receiver hereunder, and any remedy against the Corporation or receiver shall be limited to money damages determined in accordance with this title.

(f)

Liability of directors and officers

(1)

In general

A director or officer of a covered financial company may be held personally liable for monetary damages in any civil action described in paragraph (2) by, on behalf of, or at the request or direction of the Corporation, which action is prosecuted wholly or partially for the benefit of the Corporation—

(A)

acting as receiver for such covered financial company;

(B)

acting based upon a suit, claim, or cause of action purchased from, assigned by, or otherwise conveyed by the Corporation as receiver; or

(C)

acting based upon a suit, claim, or cause of action purchased from, assigned by, or otherwise conveyed in whole or in part by a covered financial company or its affiliate in connection with assistance provided under this title.

(2)

Actions covered

Paragraph (1) shall apply with respect to actions for gross negligence, including any similar conduct or conduct that demonstrates a greater disregard of a duty of care (than gross negligence) including intentional tortious conduct, as such terms are defined and determined under applicable State law.

(3)

Savings clause

Nothing in this subsection shall impair or affect any right of the Corporation under other applicable law.

(g)

Damages

In any proceeding related to any claim against a director, officer, employee, agent, attorney, accountant, or appraiser of a covered financial company, or any other party employed by or providing services to a covered financial company, recoverable damages determined to result from the improvident or otherwise improper use or investment of any assets of the covered financial company shall include principal losses and appropriate interest.

(h)

Bridge financial companies

(1)

Organization

(A)

Purpose

The Corporation, as receiver for one or more covered financial companies or in anticipation of being appointed receiver for one or more covered financial companies, may organize one or more bridge financial companies in accordance with this subsection.

(B)

Authorities

Upon the creation of a bridge financial company under subparagraph (A) with respect to a covered financial company, such bridge financial company may—

(i)

assume such liabilities (including liabilities associated with any trust or custody business, but excluding any liabilities that count as regulatory capital) of such covered financial company as the Corporation may, in its discretion, determine to be appropriate;

(ii)

purchase such assets (including assets associated with any trust or custody business) of such covered financial company as the Corporation may, in its discretion, determine to be appropriate; and

(iii)

perform any other temporary function which the Corporation may, in its discretion, prescribe in accordance with this section.

(2)

Charter and establishment

(A)

Establishment

Except as provided in subparagraph (H), where the covered financial company is a covered broker or dealer, the Corporation, as receiver for a covered financial company, may grant a Federal charter to and approve articles of association for one or more bridge financial company or companies, with respect to such covered financial company which shall, by operation of law and immediately upon issuance of its charter and approval of its articles of association, be established and operate in accordance with, and subject to, such charter, articles, and this section.

(B)

Management

Upon its establishment, a bridge financial company shall be under the management of a board of directors appointed by the Corporation.

(C)

Articles of association

The articles of association and organization certificate of a bridge financial company shall have such terms as the Corporation may provide, and shall be executed by such representatives as the Corporation may designate.

(D)

Terms of charter; rights and privileges

Subject to and in accordance with the provisions of this subsection, the Corporation shall—

(i)

establish the terms of the charter of a bridge financial company and the rights, powers, authorities, and privileges of a bridge financial company granted by the charter or as an incident thereto; and

(ii)

provide for, and establish the terms and conditions governing, the management (including the bylaws and the number of directors of the board of directors) and operations of the bridge financial company.

(E)

Transfer of rights and privileges of covered financial company

(i)

In general

Notwithstanding any other provision of Federal or State law, the Corporation may provide for a bridge financial company to succeed to and assume any rights, powers, authorities, or privileges of the covered financial company with respect to which the bridge financial company was established and, upon such determination by the Corporation, the bridge financial company shall immediately and by operation of law succeed to and assume such rights, powers, authorities, and privileges.

(ii)

Effective without approval

Any succession to or assumption by a bridge financial company of rights, powers, authorities, or privileges of a covered financial company under clause (i) or otherwise shall be effective without any further approval under Federal or State law, assignment, or consent with respect thereto.

(F)

Corporate governance and election and designation of body of law

To the extent permitted by the Corporation and consistent with this section and any rules, regulations, or directives issued by the Corporation under this section, a bridge financial company may elect to follow the corporate governance practices and procedures that are applicable to a corporation incorporated under the general corporation law of the State of Delaware, or the State of incorporation or organization of the covered financial company with respect to which the bridge financial company was established, as such law may be amended from time to time.

(G)

Capital

(i)

Capital not required

Notwithstanding any other provision of Federal or State law, a bridge financial company may, if permitted by the Corporation, operate without any capital or surplus, or with such capital or surplus as the Corporation may in its discretion determine to be appropriate.

(ii)

No contribution by the corporation required

The Corporation is not required to pay capital into a bridge financial company or to issue any capital stock on behalf of a bridge financial company established under this subsection.

(iii)

Authority

If the Corporation determines that such action is advisable, the Corporation may cause capital stock or other securities of a bridge financial company established with respect to a covered financial company to be issued and offered for sale in such amounts and on such terms and conditions as the Corporation may, in its discretion, determine.

(iv)

Operating funds in lieu of capital and implementation plan

Upon the organization of a bridge financial company, and thereafter as the Corporation may, in its discretion, determine to be necessary or advisable, the Corporation may make available to the bridge financial company, subject to the plan described in subsection (n)(13), funds for the operation of the bridge financial company in lieu of capital.

(H)

Bridge brokers or dealers

(i)

In general

The Corporation, as receiver for a covered broker or dealer, may approve articles of association for one or more bridge financial companies with respect to such covered broker or dealer, which bridge financial company or companies shall, by operation of law and immediately upon approval of its articles of association—

(I)

be established and deemed registered with the Commission under the Securities Exchange Act of 1934 and a member of SIPC;

(II)

operate in accordance with such articles and this section; and

(III)

succeed to any and all registrations and memberships of the covered financial company with or in any self-regulatory organizations.

(ii)

Other requirements

Except as provided in clause (i), and notwithstanding any other provision of this section, the bridge financial company shall be subject to the Federal securities laws and all requirements with respect to being a member of a self-regulatory organization, unless exempted from any such requirements by the Commission, as is necessary or appropriate in the public interest or for the protection of investors.

(iii)

Treatment of customers

Except as otherwise provided by this title, any customer of the covered broker or dealer whose account is transferred to a bridge financial company shall have all the rights, privileges, and protections under section 205(f) and under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.), that such customer would have had if the account were not transferred from the covered financial company under this subparagraph.

(iv)

Operation of bridge brokers or dealers

Notwithstanding any other provision of this title, the Corporation shall not operate any bridge financial company created by the Corporation under this title with respect to a covered broker or dealer in such a manner as to adversely affect the ability of customers to promptly access their customer property in accordance with applicable law.

(3)

Interests in and assets and obligations of covered financial company

Notwithstanding paragraph (1) or (2) or any other provision of law—

(A)

a bridge financial company shall assume, acquire, or succeed to the assets or liabilities of a covered financial company (including the assets or liabilities associated with any trust or custody business) only to the extent that such assets or liabilities are transferred by the Corporation to the bridge financial company in accordance with, and subject to the restrictions set forth in, paragraph (1)(B); and

(B)

a bridge financial company shall not assume, acquire, or succeed to any obligation that a covered financial company for which the Corporation has been appointed receiver may have to any shareholder, member, general partner, limited partner, or other person with an interest in the equity of the covered financial company that arises as a result of the status of that person having an equity claim in the covered financial company.

(4)

Bridge financial company treated as being in default for certain purposes

A bridge financial company shall be treated as a covered financial company in default at such times and for such purposes as the Corporation may, in its discretion, determine.

(5)

Transfer of assets and liabilities

(A)

Authority of corporation

The Corporation, as receiver for a covered financial company, may transfer any assets and liabilities of a covered financial company (including any assets or liabilities associated with any trust or custody business) to one or more bridge financial companies, in accordance with and subject to the restrictions of paragraph (1).

(B)

Subsequent transfers

At any time after the establishment of a bridge financial company with respect to a covered financial company, the Corporation, as receiver, may transfer any assets and liabilities of such covered financial company as the Corporation may, in its discretion, determine to be appropriate in accordance with and subject to the restrictions of paragraph (1).

(C)

Treatment of trust or custody business

For purposes of this paragraph, the trust or custody business, including fiduciary appointments, held by any covered financial company is included among its assets and liabilities.

(D)

Effective without approval

The transfer of any assets or liabilities, including those associated with any trust or custody business of a covered financial company, to a bridge financial company shall be effective without any further approval under Federal or State law, assignment, or consent with respect thereto.

(E)

Equitable treatment of similarly situated creditors

The Corporation shall treat all creditors of a covered financial company that are similarly situated under subsection (b)(1), in a similar manner in exercising the authority of the Corporation under this subsection to transfer any assets or liabilities of the covered financial company to one or more bridge financial companies established with respect to such covered financial company, except that the Corporation may take any action (including making payments, subject to subsection (o)(1)(E)(ii)) that does not comply with this subparagraph, if—

(i)

the Corporation determines that such action is necessary—

(I)

to maximize the value of the assets of the covered financial company;

(II)

to maximize the present value return from the sale or other disposition of the assets of the covered financial company; or

(III)

to minimize the amount of any loss realized upon the sale or other disposition of the assets of the covered financial company; and

(ii)

all creditors that are similarly situated under subsection (b)(1) receive not less than the amount provided under paragraphs (2) and (3) of subsection (d).

(F)

Limitation on transfer of liabilities

Notwithstanding any other provision of law, the aggregate amount of liabilities of a covered financial company that are transferred to, or assumed by, a bridge financial company from a covered financial company may not exceed the aggregate amount of the assets of the covered financial company that are transferred to, or purchased by, the bridge financial company from the covered financial company.

(6)

Stay of judicial action

Any judicial action to which a bridge financial company becomes a party by virtue of its acquisition of any assets or assumption of any liabilities of a covered financial company shall be stayed from further proceedings for a period of not longer than 45 days (or such longer period as may be agreed to upon the consent of all parties) at the request of the bridge financial company.

(7)

Agreements against interest of the bridge financial company

No agreement that tends to diminish or defeat the interest of the bridge financial company in any asset of a covered financial company acquired by the bridge financial company shall be valid against the bridge financial company, unless such agreement—

(A)

is in writing;

(B)

was executed by an authorized officer or representative of the covered financial company or confirmed in the ordinary course of business by the covered financial company; and

(C)

has been on the official record of the company, since the time of its execution, or with which, the party claiming under the agreement provides documentation of such agreement and its authorized execution or confirmation by the covered financial company that is acceptable to the receiver.

(8)

No Federal status

(A)

Agency status

A bridge financial company is not an agency, establishment, or instrumentality of the United States.

(B)

Employee status

Representatives for purposes of paragraph (1)(B), directors, officers, employees, or agents of a bridge financial company are not, solely by virtue of service in any such capacity, officers or employees of the United States. Any employee of the Corporation or of any Federal instrumentality who serves at the request of the Corporation as a representative for purposes of paragraph (1)(B), director, officer, employee, or agent of a bridge financial company shall not—

(i)

solely by virtue of service in any such capacity lose any existing status as an officer or employee of the United States for purposes of title 5, United States Code, or any other provision of law; or

(ii)

receive any salary or benefits for service in any such capacity with respect to a bridge financial company in addition to such salary or benefits as are obtained through employment with the Corporation or such Federal instrumentality.

(9)

Funding authorized

The Corporation may, subject to the plan described in subsection (n)(13), provide funding to facilitate any transaction described in subparagraph (A), (B), (C), or (D) of paragraph (13) with respect to any bridge financial company, or facilitate the acquisition by a bridge financial company of any assets, or the assumption of any liabilities, of a covered financial company for which the Corporation has been appointed receiver.

(10)

Exempt tax status

Notwithstanding any other provision of Federal or State law, a bridge financial company, its franchise, property, and income shall be exempt from all taxation now or hereafter imposed by the United States, by any territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority.

(11)

Federal agency approval; antitrust review

If a transaction involving the merger or sale of a bridge financial company requires approval by a Federal agency, the transaction may not be consummated before the 5th calendar day after the date of approval by the Federal agency responsible for such approval with respect thereto. If, in connection with any such approval a report on competitive factors from the Attorney General is required, the Federal agency responsible for such approval shall promptly notify the Attorney General of the proposed transaction and the Attorney General shall provide the required report within 10 days of the request. If a notification is required under section 7A of the Clayton Act with respect to such transaction, the required waiting period shall end on the 15th day after the date on which the Attorney General and the Federal Trade Commission receive such notification, unless the waiting period is terminated earlier under section 7A(b)(2) of the Clayton Act, or extended under section 7A(e)(2) of that Act.

(12)

Duration of bridge financial company

Subject to paragraphs (13) and (14), the status of a bridge financial company as such shall terminate at the end of the 2-year period following the date on which it was granted a charter. The Corporation may, in its discretion, extend the status of the bridge financial company as such for no more than 3 additional 1-year periods.

(13)

Termination of bridge financial company status

The status of any bridge financial company as such shall terminate upon the earliest of—

(A)

the date of the merger or consolidation of the bridge financial company with a company that is not a bridge financial company;

(B)

at the election of the Corporation, the sale of a majority of the capital stock of the bridge financial company to a company other than the Corporation and other than another bridge financial company;

(C)

the sale of 80 percent, or more, of the capital stock of the bridge financial company to a person other than the Corporation and other than another bridge financial company;

(D)

at the election of the Corporation, either the assumption of all or substantially all of the liabilities of the bridge financial company by a company that is not a bridge financial company, or the acquisition of all or substantially all of the assets of the bridge financial company by a company that is not a bridge financial company, or other entity as permitted under applicable law; and

(E)

the expiration of the period provided in paragraph (12), or the earlier dissolution of the bridge financial company, as provided in paragraph (15).

(14)

Effect of termination events

(A)

Merger or consolidation

A merger or consolidation, described in paragraph (12)(A) shall be conducted in accordance with, and shall have the effect provided in, the provisions of applicable law. For the purpose of effecting such a merger or consolidation, the bridge financial company shall be treated as a corporation organized under the laws of the State of Delaware (unless the law of another State has been selected by the bridge financial company in accordance with paragraph (2)(F)), and the Corporation shall be treated as the sole shareholder thereof, notwithstanding any other provision of State or Federal law.

(B)

Charter conversion

Following the sale of a majority of the capital stock of the bridge financial company, as provided in paragraph (13)(B), the Corporation may amend the charter of the bridge financial company to reflect the termination of the status of the bridge financial company as such, whereupon the company shall have all of the rights, powers, and privileges under its constituent documents and applicable Federal or State law. In connection therewith, the Corporation may take such steps as may be necessary or convenient to reincorporate the bridge financial company under the laws of a State and, notwithstanding any provisions of Federal or State law, such State-chartered corporation shall be deemed to succeed by operation of law to such rights, titles, powers, and interests of the bridge financial company as the Corporation may provide, with the same effect as if the bridge financial company had merged with the State-chartered corporation under provisions of the corporate laws of such State.

(C)

Sale of stock

Following the sale of 80 percent or more of the capital stock of a bridge financial company, as provided in paragraph (13)(C), the company shall have all of the rights, powers, and privileges under its constituent documents and applicable Federal or State law. In connection therewith, the Corporation may take such steps as may be necessary or convenient to reincorporate the bridge financial company under the laws of a State and, notwithstanding any provisions of Federal or State law, the State-chartered corporation shall be deemed to succeed by operation of law to such rights, titles, powers and interests of the bridge financial company as the Corporation may provide, with the same effect as if the bridge financial company had merged with the State-chartered corporation under provisions of the corporate laws of such State.

(D)

Assumption of liabilities and sale of assets

Following the assumption of all or substantially all of the liabilities of the bridge financial company, or the sale of all or substantially all of the assets of the bridge financial company, as provided in paragraph (13)(D), at the election of the Corporation, the bridge financial company may retain its status as such for the period provided in paragraph (12) or may be dissolved at the election of the Corporation.

(E)

Amendments to charter

Following the consummation of a transaction described in subparagraph (A), (B), (C), or (D) of paragraph (13), the charter of the resulting company shall be amended to reflect the termination of bridge financial company status, if appropriate.

(15)

Dissolution of bridge financial company

(A)

In general

Notwithstanding any other provision of Federal or State law, if the status of a bridge financial company as such has not previously been terminated by the occurrence of an event specified in subparagraph (A), (B), (C), or (D) of paragraph (13)—

(i)

the Corporation may, in its discretion, dissolve the bridge financial company in accordance with this paragraph at any time; and

(ii)

the Corporation shall promptly commence dissolution proceedings in accordance with this paragraph upon the expiration of the 2-year period following the date on which the bridge financial company was chartered, or any extension thereof, as provided in paragraph (12).

(B)

Procedures

The Corporation shall remain the receiver for a bridge financial company for the purpose of dissolving the bridge financial company. The Corporation as receiver for a bridge financial company shall wind up the affairs of the bridge financial company in conformity with the provisions of law relating to the liquidation of covered financial companies under this title. With respect to any such bridge financial company, the Corporation as receiver shall have all the rights, powers, and privileges and shall perform the duties related to the exercise of such rights, powers, or privileges granted by law to the Corporation as receiver for a covered financial company under this title and, notwithstanding any other provision of law, in the exercise of such rights, powers, and privileges, the Corporation shall not be subject to the direction or supervision of any State agency or other Federal agency.

(16)

Authority to obtain credit

(A)

In general

A bridge financial company may obtain unsecured credit and issue unsecured debt.

(B)

Inability to obtain credit

If a bridge financial company is unable to obtain unsecured credit or issue unsecured debt, the Corporation may authorize the obtaining of credit or the issuance of debt by the bridge financial company—

(i)

with priority over any or all of the obligations of the bridge financial company;

(ii)

secured by a lien on property of the bridge financial company that is not otherwise subject to a lien; or

(iii)

secured by a junior lien on property of the bridge financial company that is subject to a lien.

(C)

Limitations

(i)

In general

The Corporation, after notice and a hearing, may authorize the obtaining of credit or the issuance of debt by a bridge financial company that is secured by a senior or equal lien on property of the bridge financial company that is subject to a lien, only if—

(I)

the bridge financial company is unable to otherwise obtain such credit or issue such debt; and

(II)

there is adequate protection of the interest of the holder of the lien on the property with respect to which such senior or equal lien is proposed to be granted.

(ii)

Hearing

The hearing required pursuant to this subparagraph shall be before a court of the United States, which shall have jurisdiction to conduct such hearing.

(D)

Burden of proof

In any hearing under this paragraph, the Corporation has the burden of proof on the issue of adequate protection.

(E)

Qualified financial contracts

No credit or debt obtained or issued by a bridge financial company may contain terms that impair the rights of a counterparty to a qualified financial contract upon a default by the bridge financial company, other than the priority of such counterparty’s unsecured claim (after the exercise of rights) relative to the priority of the bridge financial company’s obligations in respect of such credit or debt, unless such counterparty consents in writing to any such impairment.

(17)

Effect on debts and liens

The reversal or modification on appeal of an authorization under this subsection to obtain credit or issue debt, or of a grant under this section of a priority or a lien, does not affect the validity of any debt so issued, or any priority or lien so granted, to an entity that extended such credit in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and the issuance of such debt, or the granting of such priority or lien, were stayed pending appeal.

(i)

Sharing records

If the Corporation has been appointed as receiver for a covered financial company, other Federal regulators shall make all records relating to the covered financial company available to the Corporation, which may be used by the Corporation in any manner that the Corporation determines to be appropriate.

(j)

Expedited procedures for certain claims

(1)

Time for filing notice of appeal

The notice of appeal of any order, whether interlocutory or final, entered in any case brought by the Corporation against a director, officer, employee, agent, attorney, accountant, or appraiser of the covered financial company, or any other person employed by or providing services to a covered financial company, shall be filed not later than 30 days after the date of entry of the order. The hearing of the appeal shall be held not later than 120 days after the date of the notice of appeal. The appeal shall be decided not later than 180 days after the date of the notice of appeal.

(2)

Scheduling

The court shall expedite the consideration of any case brought by the Corporation against a director, officer, employee, agent, attorney, accountant, or appraiser of a covered financial company or any other person employed by or providing services to a covered financial company. As far as practicable, the court shall give such case priority on its docket.

(3)

Judicial discretion

The court may modify the schedule and limitations stated in paragraphs (1) and (2) in a particular case, based on a specific finding that the ends of justice that would be served by making such a modification would outweigh the best interest of the public in having the case resolved expeditiously.

(k)

Foreign investigations

The Corporation, as receiver for any covered financial company, and for purposes of carrying out any power, authority, or duty with respect to a covered financial company—

(1)

may request the assistance of any foreign financial authority and provide assistance to any foreign financial authority in accordance with section 8(v) of the Federal Deposit Insurance Act, as if the covered financial company were an insured depository institution, the Corporation were the appropriate Federal banking agency for the company, and any foreign financial authority were the foreign banking authority; and

(2)

may maintain an office to coordinate foreign investigations or investigations on behalf of foreign financial authorities.

(l)

Prohibition on entering secrecy agreements and protective orders

The Corporation may not enter into any agreement or approve any protective order which prohibits the Corporation from disclosing the terms of any settlement of an administrative or other action for damages or restitution brought by the Corporation in its capacity as receiver for a covered financial company.

(m)

Liquidation of certain covered financial companies or bridge financial companies

(1)

In general

Except as specifically provided in this section, and notwithstanding any other provision of law, the Corporation, in connection with the liquidation of any covered financial company or bridge financial company with respect to which the Corporation has been appointed as receiver, shall—

(A)

in the case of any covered financial company or bridge financial company that is or has a subsidiary that is a stockbroker, but is not a member of the Securities Investor Protection Corporation, apply the provisions of subchapter III of chapter 7 of the Bankruptcy Code, in respect of the distribution to any customer of all customer name securities and customer property, as if such covered financial company or bridge financial company were a debtor for purposes of such subchapter; or

(B)

in the case of any covered financial company or bridge financial company that is a commodity broker, apply the provisions of subchapter IV of chapter 7 the Bankruptcy Code, in respect of the distribution to any customer of all customer property, as if such covered financial company or bridge financial company were a debtor for purposes of such subchapter.

(2)

Definitions

For purposes of this subsection—

(A)

the terms customer, customer name securities, and customer property have the same meanings as in section 741 of title 11, United States Code; and

(B)

the terms commodity broker and stockbroker have the same meanings as in section 101 of the Bankruptcy Code.

(n)

Orderly liquidation fund

(1)

Establishment

There is established in the Treasury of the United States a separate fund to be known as the Orderly Liquidation Fund, which shall be available to the Corporation to carry out the authorities contained in this title, for the cost of actions authorized by this title, including the orderly liquidation of covered financial companies, payment of administrative expenses, the payment of principal and interest by the Corporation on obligations issued under paragraph (9), and the exercise of the authorities of the Corporation under this title.

(2)

Proceeds

Amounts received by the Corporation, including assessments received under subsection (o), proceeds of obligations issued under paragraph (9), interest and other earnings from investments, and repayments to the Corporation by covered financial companies, shall be deposited into the Fund.

(3)

Management

The Corporation shall manage the Fund in accordance with this subsection and the policies and procedures established under section 203(d).

(4)

Investments

The Corporation shall invest amounts in the Fund in accordance with paragraph (8).

(5)

Target size of the fund

The target size of the Fund (in this section referred to as target size) shall be $50,000,000,000, adjusted for inflation on a periodic basis by the Corporation.

(6)

Initial capitalization period

The Corporation shall impose risk-based assessments as provided under subsection (o), during the period beginning one year after the date of enactment of this Act and ending on the date on which the Fund reaches the target size (in this section referred to as the initial capitalization period), provided that the initial capitalization period shall be not shorter than 5 years, and not longer than 10 years, after the date of enactment of this Act. The Corporation, with the approval of the Secretary, may extend the initial capitalization period for a longer period, as determined necessary by the Corporation, if the Corporation is appointed receiver for a covered financial company under this title and the Fund incurs a loss before the expiration of such period.

(7)

Maintaining the fund

Upon the expiration of the initial capitalization period, the Corporation shall suspend assessments, except as set forth in subsection (o)(1).

(8)

Investments

At the request of the Corporation, the Secretary may invest such portion of amounts held in the Fund that are not, in the judgment of the Corporation, required to meet the current needs of the Corporation, in obligations of the United States having suitable maturities, as determined by the Corporation. The interest on and the proceeds from the sale or redemption of such obligations shall be credited to the Fund.

(9)

Authority to issue obligations

(A)

Corporation authorized to issue obligations

Upon appointment by the Secretary of the Corporation as receiver for a covered financial company, the Corporation is authorized to issue obligations to the Secretary.

(B)

Secretary authorized to purchase obligations

The Secretary may, under such terms and conditions as the Secretary may require, purchase or agree to purchase any obligations issued under subparagraph (A), and for such purpose, the Secretary is authorized to use as a public debt transaction the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include such purchases.

(C)

Interest rate

Each purchase of obligations by the Secretary under this paragraph shall be upon such terms and conditions as to yield a return at a rate determined by the Secretary, taking into consideration the current average yield on outstanding marketable obligations of the United States of comparable maturity.

(D)

Secretary authorized to sell obligations

The Secretary may sell, upon such terms and conditions as the Secretary shall determine, any of the obligations acquired under this paragraph.

(E)

Public debt transactions

All purchases and sales by the Secretary of such obligations under this paragraph shall be treated as public debt transactions of the United States, and the proceeds from the sale of any obligations acquired by the Secretary under this paragraph shall be deposited into the Treasury of the United States as miscellaneous receipts.

(10)

Maximum obligation limitation

The Corporation may not, in connection with the orderly liquidation of a covered financial company, issue or incur any obligation, if, after issuing or incurring the obligation, the aggregate amount of such obligations outstanding under this subsection would exceed the sum of—

(A)

the amount of cash or the cash equivalents held by the Fund; and

(B)

the amount that is equal to 90 percent of the fair value of assets from each covered financial company that are available to repay the Corporation.

(11)

Rulemaking

The Corporation and the Secretary shall jointly, in consultation with the Council, prescribe regulations governing the calculation of the maximum obligation limitation defined in this paragraph.

(12)

Reliance on private sector funding

The Corporation may exercise its authority under paragraph (9) only after the cash and cash equivalents held by the Fund have been drawn down to facilitate the orderly liquidation of a covered financial company.

(13)

Rule of construction

(A)

In general

Nothing in this section shall be construed to affect the authority of the Corporation under subsection (a) or (b) of section 14 or section 15(c)(5) of the Federal Deposit Insurance Act (12 U.S.C. 1824, 1825(c)(5)), the management of the Deposit Insurance Fund by the Corporation, or the resolution of insured depository institutions, provided that—

(i)

none of the authorities contained in this title shall be used to assist the Deposit Insurance Fund with any of the other responsibilities of the Corporation under applicable law other than this title; and

(ii)

the authorities of the Corporation relating to the Deposit Insurance Fund, or any other responsibilities of the Corporation, shall not be used to assist a covered financial company pursuant to this title.

(B)

Valuation

For purposes of determining the amount of obligations under this subsection—

(i)

the Corporation shall include as an obligation any contingent liability of the Corporation pursuant to this title; and

(ii)

the Corporation shall value any contingent liability at its expected cost to the Corporation.

(14)

Orderly liquidation plan

Amounts in the Fund shall be available to the Corporation with regard to a covered financial company for which the Corporation is appointed receiver after the Corporation has developed an orderly liquidation plan that is acceptable to the Secretary with regard to such covered financial company, including the provision and use of funds under section 204(d) and subsection (h)(2)(G)(iv) and (h)(9) of this section. The Corporation may, at any time, amend any orderly liquidation plan approved by the Secretary with the concurrence of the Secretary.

(o)

Assessments

(1)

Risk-based assessments

(A)

Assessments to capitalize the fund

(i)

In general

Except as provided under subparagraph (C)(ii), the Corporation shall impose risk-based assessments on eligible financial companies to capitalize the Fund during the initial capitalization period, taking into account the considerations set forth in paragraph (4).

(ii)

Suspension of assessments

The Corporation shall suspend the imposition of assessments under clause (i) following a determination by the Corporation that the Fund has reached the target size described in subsection (n).

(B)

Eligible financial companies defined

For purposes of this subsection, the term eligible financial company means any bank holding company with total consolidated assets equal to or greater than $50,000,000,000 and any nonbank financial company supervised by the Board of Governors.

(C)

Additional assessments

The Corporation shall charge one or more risk-based assessments in accordance with the provisions of subparagraph (E), if—

(i)

the Fund falls below the target size after the initial capitalization period, in order to restore the Fund to the target size over a period of time determined by the Corporation;

(ii)

the Corporation is appointed receiver for a covered financial company and the Fund incurs a loss during the initial capitalization period with respect to that covered financial company; or

(iii)

such assessments are necessary to pay in full the obligations issued by the Corporation to the Secretary within 60 months of the date of issuance of such obligations.

(D)

Extensions authorized

The Corporation may, with the approval of the Secretary, extend the time period under subparagraph (C)(iii), if the Corporation determines that an extension is necessary to avoid a serious adverse effect on the financial system of the United States.

(E)

Application of additional assessments

To meet the requirements of subparagraph (C), the Corporation shall, taking into account the considerations set forth in paragraph (4), impose assessments—

(i)

on—

(I)

eligible financial companies; and

(II)

financial companies with total consolidated assets over $50,000,000,000 that are not eligible financial companies; and

(ii)

at a substantially higher rate than otherwise would be assessed on any financial company that received payments or credit pursuant to subsection (b)(4), (d)(4), or (h)(5)(E).

(F)

New eligible financial companies

The Corporation shall impose an assessment, in an amount determined by the Corporation in consultation with the Secretary and taking into account the considerations set forth in paragraph (4), on any company that becomes an eligible financial company after the initial capitalization period.

(2)

Graduated assessment rate

The Corporation shall impose assessments on a graduated basis, with financial companies having greater assets being assessed at a higher rate.

(3)

Notification and payment

The Corporation shall notify each financial company of that company's assessment under this subsection. Any financial company subject to assessment under this subsection shall pay such assessment in accordance with the regulations prescribed pursuant to paragraph (6).

(4)

Risk-based assessment considerations

In imposing assessments under this subsection, the Corporation shall—

(A)

take into account economic conditions generally affecting financial companies, so as to allow assessments to be lower during less favorable economic conditions;

(B)

take into account any assessments imposed on—

(i)

an insured depository institution subsidiary of a financial company pursuant to section 7 or section 13(c)(4)(G) of the Federal Deposit Insurance Act (12 U.S.C. 1817, 1823(c)(4)(G));

(ii)

a financial company or subsidiary of such company that is a member of SIPC pursuant to section 4 of the Securities Investor Protection Act of 1970 (15 U.S.C. 78ddd); and

(iii)

a financial company or subsidiary of such company that is an insurance company pursuant to applicable State law to cover (or reimburse payments made to cover) the costs of rehabilitation, liquidation, or other State insolvency proceeding with respect to one or more insurance companies;

(C)

take into account the financial condition of the financial company, including the extent and type of off-balance-sheet exposures of the financial company;

(D)

take into account the risks presented by the financial company to the financial stability of the United States economy;

(E)

take into account the extent to which the financial company or group of financial companies has benefitted, or likely would benefit, from the orderly liquidation of a covered financial company and the use of the Fund under this title;

(F)

distinguish among different classes of assets or different types of financial companies (including distinguishing among different types of financial companies, based on their levels of capital and leverage) in order to establish comparable assessment bases among financial companies subject to this subsection;

(G)

establish the parameters for the graduated assessment requirement in paragraph (2); and

(H)

take into account such other factors as the Corporation deems appropriate.

(5)

Collection of information

The Corporation may impose on covered financial companies such collection of information requirements as the Corporation deems necessary to carry out this subsection after the appointment of the Corporation as receiver under this title.

(6)

Rulemaking

(A)

In general

The Corporation shall, in consultation with the Secretary and the Council, prescribe regulations to carry out this subsection.

(B)

Equitable treatment

The regulations prescribed under subparagraph (A) shall take into account the differences in risks posed to the financial stability of the United States by financial companies, the differences in the liability structures of financial companies, and the different bases for other assessments that such financial companies may be required to pay, to ensure that assessed financial companies are treated equitably and that assessments under this subsection reflect such differences.

(p)

Unenforceability of certain agreements

(1)

In general

No provision described in paragraph (2) shall be enforceable against or impose any liability on any person, as such enforcement or liability shall be contrary to public policy.

(2)

Prohibited provisions

A provision described in this paragraph is any term contained in any existing or future standstill, confidentiality, or other agreement that, directly or indirectly—

(A)

affects, restricts, or limits the ability of any person to offer to acquire or acquire;

(B)

prohibits any person from offering to acquire or acquiring; or

(C)

prohibits any person from using any previously disclosed information in connection with any such offer to acquire or acquisition of,

all or part of any covered financial company, including any liabilities, assets, or interest therein, in connection with any transaction in which the Corporation exercises its authority under this title.
(q)

Other exemptions

(1)

In general

When acting as a receiver under this title—

(A)

the Corporation, including its franchise, its capital, reserves and surplus, and its income, shall be exempt from all taxation imposed by any State, county, municipality, or local taxing authority, except that any real property of the Corporation shall be subject to State, territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed, except that, notwithstanding the failure of any person to challenge an assessment under State law of the value of such property, such value, and the tax thereon, shall be determined as of the period for which such tax is imposed;

(B)

no property of the Corporation shall be subject to levy, attachment, garnishment, foreclosure, or sale without the consent of the Corporation, nor shall any involuntary lien attach to the property of the Corporation; and

(C)

the Corporation shall not be liable for any amounts in the nature of penalties or fines, including those arising from the failure of any person to pay any real property, personal property, probate, or recording tax or any recording or filing fees when due; and

(D)

the Corporation shall be exempt from all prosecution by the United States or any State, county, municipality, or local authority for any criminal offense arising under Federal, State, county, municipal, or local law, which was allegedly committed by the covered financial company, or persons acting on behalf of the covered financial company, prior to the appointment of the Corporation as receiver.

(2)

Limitation

Paragraph (1) shall not apply with respect to any tax imposed (or other amount arising) under the Internal Revenue Code of 1986.

(r)

Certain sales of assets prohibited

(1)

Persons who engaged in improper conduct with, or caused losses to, covered financial companies

The Corporation shall prescribe regulations which, at a minimum, shall prohibit the sale of assets of a covered financial company by the Corporation to—

(A)

any person who—

(i)

has defaulted, or was a member of a partnership or an officer or director of a corporation that has defaulted, on 1 or more obligations, the aggregate amount of which exceeds $1,000,000, to such covered financial company;

(ii)

has been found to have engaged in fraudulent activity in connection with any obligation referred to in clause (i); and

(iii)

proposes to purchase any such asset in whole or in part through the use of the proceeds of a loan or advance of credit from the Corporation or from any covered financial company;

(B)

any person who participated, as an officer or director of such covered financial company or of any affiliate of such company, in a material way in any transaction that resulted in a substantial loss to such covered financial company; or

(C)

any person who has demonstrated a pattern or practice of defalcation regarding obligations to such covered financial company.

(2)

Convicted debtors

Except as provided in paragraph (3), a person may not purchase any asset of such institution from the receiver, if that person—

(A)

has been convicted of an offense under section 215, 656, 657, 1005, 1006, 1007, 1008, 1014, 1032, 1341, 1343, or 1344 of title 18, United States Code, or of conspiring to commit such an offense, affecting any covered financial company; and

(B)

is in default on any loan or other extension of credit from such covered financial company which, if not paid, will cause substantial loss to the Fund or the Corporation.

(3)

Settlement of claims

Paragraphs (1) and (2) shall not apply to the sale or transfer by the Corporation of any asset of any covered financial company to any person, if the sale or transfer of the asset resolves or settles, or is part of the resolution or settlement, of 1 or more claims that have been, or could have been, asserted by the Corporation against the person.

(4)

Definition of default

For purposes of this subsection, the term default means a failure to comply with the terms of a loan or other obligation to such an extent that the property securing the obligation is foreclosed upon.

211.

Miscellaneous provisions

(a)

Clarification of prohibition regarding concealment of assets from receiver or liquidating agent

Section 1032(1) of title 18, United States Code, is amended by inserting the Federal Deposit Insurance Corporation acting as receiver for a covered financial company, in accordance with title II of the Restoring American Financial Stability Act of 2010, before or the National Credit.

(b)

Conforming amendment

Section 1032 of title 18, United States Code, is amended in the section heading, by striking of financial institution.

(c)

Federal deposit insurance corporation improvement Act of 1991

Section 403(a) of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 4403(a)) is amended by inserting section 210(c) of the Restoring American Financial Stability Act of 2010, section 1367 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4617(d)), after section 11(e) of the Federal Deposit Insurance Act,.

III

Transfer of powers to the Comptroller of the Currency, the Corporation, and the Board of Governors

300.

Short title

This title may be cited as the Enhancing Financial Institution Safety and Soundness Act of 2010.

301.

Purposes

The purposes of this title are—

(1)

to provide for the safe and sound operation of the banking system of the United States;

(2)

to preserve and protect the dual system of Federal and State-chartered depository institutions;

(3)

to ensure the fair and appropriate supervision of each depository institution, regardless of the size or type of charter of the depository institution; and

(4)

to streamline and rationalize the supervision of depository institutions and the holding companies of depository institutions.

302.

Definition

In this title, the term transferred employee means, as the context requires, an employee transferred to the Office of the Comptroller of the Currency or the Corporation under section 322.

A

Transfer of powers and duties

311.

Transfer date

(a)

Transfer date

Except as provided in subsection (b), the term transfer date means the date that is 1 year after the date of enactment of this Act.

(b)

Extension permitted

(1)

Notice required

The Secretary, in consultation with the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the Chairman of the Board of Governors, and the Chairperson of the Corporation, may extend the period under subsection (a) and designate a transfer date that is not later than 18 months after the date of enactment of this Act, if the Secretary transmits to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives—

(A)

a written determination that commencement of the orderly process to implement this title is not feasible by the date that is 1 year after the date of enactment of this Act;

(B)

an explanation of why an extension is necessary to commence the process of orderly implementation of this title;

(C)

the transfer date designated under this subsection; and

(D)

a description of the steps that will be taken to initiate the process of an orderly and timely implementation of this title within the extended time period.

(2)

Publication of notice

Not later than 270 days after the date of enactment of this Act, the Secretary shall publish in the Federal Register notice of any transfer date designated under paragraph (1).

312.

Powers and duties transferred

(a)

Effective date

This section, and the amendments made by this section, shall take effect on the transfer date.

(b)

Functions of the Office of Thrift Supervision

(1)

Savings and loan holding company functions transferred

(A)

Board of Governors

There are transferred to the Board of Governors all functions of the Office of Thrift Supervision and the Director of the Office of Thrift Supervision (including the authority to issue orders) relating to—

(i)

the supervision of—

(I)

any savings and loan holding company—

(aa)

having $50,000,000,000 or more in total consolidated assets; or

(bb)

that is a foreign bank; and

(II)

any subsidiary (other than a depository institution) of a savings and loan holding company described in subclause (I); and

(ii)

all rulemaking authority of the Office of Thrift Supervision and the Director of the Office of Thrift Supervision relating to savings and loan holding companies.

(B)

Comptroller of the Currency

Except as provided in subparagraph (A), there are transferred to the Office of the Comptroller of the Currency all functions of the Office of Thrift Supervision and the Director of the Office of Thrift Supervision (including the authority to issue orders) relating to the supervision of—

(i)

any savings and loan holding company (other than a foreign bank)—

(I)

having less than $50,000,000,000 in total consolidated assets; and

(II)

having—

(aa)

a subsidiary that is an insured depository institution, if all such insured depository institutions are Federal depository institutions; or

(bb)

a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are Federal depository institutions exceed the total consolidated assets of all subsidiaries that are State depository institutions; and

(ii)

any subsidiary (other than a depository institution) of a savings and loan holding company described in clause (i).

(C)

Corporation

Except as provided in subparagraph (A), there are transferred to the Corporation all functions of the Office of Thrift Supervision and the Director of the Office of Thrift Supervision (including the authority to issue orders) relating to the supervision of—

(i)

any savings and loan holding company (other than a foreign bank)—

(I)

having less than $50,000,000,000 in total consolidated assets; and

(II)

having—

(aa)

a subsidiary that is an insured depository institution, if all such insured depository institutions are State depository institutions; or

(bb)

a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are State depository institutions exceed the total consolidated assets of all subsidiaries that are Federal depository institutions; and

(ii)

any subsidiary (other than a depository institution) of a savings and loan holding company described in clause (i).

(2)

All other functions transferred

(A)

Board of Governors

All rulemaking authority of the Office of Thrift Supervision and the Director of the Office of Thrift Supervision under section 11 of the Home Owners’ Loan Act (12 U.S.C. 1468) relating to transactions with affiliates and extensions of credit to executive officers, directors, and principal shareholders is transferred to the Board of Governors.

(B)

Comptroller of the Currency

Except as provided in subparagraph (A), there are transferred to the Comptroller of the Currency all functions of the Office of Thrift Supervision and the Director of the Office of Thrift Supervision relating to Federal savings associations.

(C)

Corporation

Except as provided in paragraph (1), all functions of the Office of Thrift Supervision and the Director of the Office of Thrift Supervision relating to State savings associations are transferred to the Corporation.

(D)

Comptroller of the Currency and the Corporation

All rulemaking authority of the Office of Thrift Supervision and the Director of the Office of Thrift Supervision relating to savings associations is transferred to, and shall be exercised jointly by, the Comptroller of the Currency and the Corporation.

(c)

Certain functions of the board of governors

(1)

Bank holding company functions transferred

(A)

Comptroller of the Currency

Except as provided in subparagraph (C), there are transferred to the Office of the Comptroller of the Currency all functions of the Board of Governors (including any Federal reserve bank) relating to the supervision of—

(i)

any bank holding company (other than a foreign bank)—

(I)

having less than $50,000,000,000 in total consolidated assets; and

(II)

having—

(aa)

a subsidiary that is an insured depository institution, if all such insured depository institutions are Federal depository institutions; or

(bb)

a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are Federal depository institutions exceed the total consolidated assets of all subsidiaries that are State depository institutions; and

(ii)

any subsidiary (other than a depository institution) of a bank holding company that is described in clause (i).

(B)

Corporation

Except as provided in subparagraph (C), there are transferred to the Corporation all functions of the Board of Governors (including any Federal reserve bank) relating to the supervision of—

(i)

any bank holding company (other than a foreign bank)—

(I)

having less than $50,000,000,000 in total consolidated assets; and

(II)

having—

(aa)

a subsidiary that is an insured depository institution, if all such insured depository institutions are State depository institutions; or

(bb)

a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are State depository institutions exceed the total consolidated assets of all subsidiaries that are Federal depository institutions; and

(ii)

any subsidiary (other than a depository institution) of a bank holding company that is described in clause (i).

(C)

Rulemaking authority

No rulemaking authority of the Board of Governors is transferred to the Office of the Comptroller of the Currency or the Corporation under this paragraph.

(2)

Other functions transferred

There are transferred to the Corporation all functions (other than rulemaking authority under the Federal Reserve Act) of the Board of Governors (and any Federal reserve bank) relating to the supervision of insured State member banks.

(d)

Conforming amendments

(1)

Federal deposit insurance Act

Section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)) is amended by striking paragraphs (1) through (4) and inserting the following:

(1)

the Office of the Comptroller of the Currency, in the case of—

(A)

any national banking association;

(B)

any Federal branch or agency of a foreign bank;

(C)

any bank holding company (other than a foreign bank)—

(i)

having less than $50,000,000,000 in total consolidated assets; and

(ii)

having—

(I)

a subsidiary that is an insured depository institution, if all such insured depository institutions are Federal depository institutions; or

(II)

a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are Federal depository institutions exceed the total consolidated assets of all subsidiaries that are State depository institutions;

(D)

any subsidiary (other than a depository institution) of a bank holding company that is described in subparagraph (C);

(E)

any Federal savings association;

(F)

any savings and loan holding company (other than a foreign bank)—

(i)

having less than $50,000,000,000 in total consolidated assets; and

(ii)

having—

(I)

a subsidiary that is an insured depository institution, if all such insured depository institutions are Federal depository institutions; or

(II)

a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are Federal depository institutions exceed the total consolidated assets of all subsidiaries that are State depository institutions; and

(G)

any subsidiary (other than a depository institution) of a savings and loan holding company that is described in subparagraph (F);

(2)

the Federal Deposit Insurance Corporation, in the case of—

(A)

any insured State bank;

(B)

any foreign bank having an insured branch;

(C)

any State savings association;

(D)

any bank holding company (other than a foreign bank)—

(i)

having less than $50,000,000,000 in total consolidated assets; and

(ii)

having—

(I)

a subsidiary that is an insured depository institution, if all such insured depository institutions are State depository institutions; or

(II)

a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are State depository institutions exceed the total consolidated assets of all subsidiaries that are Federal depository institutions;

(E)

any subsidiary (other than a depository institution) of a bank holding company that is described in subparagraph (D);

(F)

any savings and loan holding company (other than a foreign bank)—

(i)

having less than $50,000,000,000 in total consolidated assets; and

(ii)

having—

(I)

a subsidiary that is an insured depository institution, if all such insured depository institutions are State depository institutions; or

(II)

a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are State depository institutions exceed the total consolidated assets of all subsidiaries that are Federal depository institutions; and

(G)

any subsidiary (other than a depository institution) of a savings and loan holding company that is described in subparagraph (F);

(3)

the Board of Governors of the Federal Reserve System, in the case of—

(A)

any noninsured State member bank;

(B)

any branch or agency of a foreign bank with respect to any provision of the Federal Reserve Act which is made applicable under the International Banking Act of 1978;

(C)

any foreign bank which does not operate an insured branch;

(D)

any agency or commercial lending company other than a Federal agency;

(E)

supervisory or regulatory proceedings arising from the authority given to the Board of Governors under section 7(c)(1) of the International Banking Act of 1978, including such proceedings under the Financial Institutions Supervisory Act of 1966;

(F)

any bank holding company having total consolidated assets of $50,000,000,000 or more, any bank holding company that is a foreign bank, and any subsidiary (other than a depository institution) of such a bank holding company; and

(G)

any savings and loan holding company having total consolidated assets of $50,000,000,000 or more, any savings and loan holding company that is a foreign bank, and any subsidiary (other than a depository institution) of such a savings and loan holding company.

.

(2)

Certain references in the bank holding company Act of 1956

(A)

Comptroller of the Currency

On or after the transfer date, in the case of a bank holding company described in section 3(q)(1)(C) of the Federal Deposit Insurance Act, as amended by this Act, any reference in the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) to the Board of Governors shall be deemed to be a reference to the Office of the Comptroller of the Currency.

(B)

Corporation

On or after the transfer date, in the case of a bank holding company described in section 3(q)(2)(D) of the Federal Deposit Insurance Act, as amended by this Act, any reference in the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) to the Board of Governors shall be deemed to be a reference to the Corporation.

(C)

Rule of construction

Notwithstanding subparagraph (A) or (B), the Board of Governors shall retain all rulemaking authority under the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.).

(3)

Consultation in holding company rulemaking

(A)

Bank holding companies

Section 5 of the Bank Holding Company Act of 1956 (12 U.S.C. 1844) is amended by adding at the end the following:

(h)

Consultation in rulemaking

Before proposing or adopting regulations under this Act that apply to bank holding companies having less than $50,000,000,000 in total consolidated assets, the Board of Governors shall consult with the Comptroller of the Currency and the Federal Deposit Insurance Corporation as to the terms of such regulations.

.

(B)

Savings and loan holding companies

(i)

Home Owners' Loan Act

Section 10 of the Home Owners' Loan Act (12 U.S.C. 1467a) is amended by adding at the end the following:

(u)

Consultation in rulemaking

Before proposing or adopting regulations under this section that apply to savings and loan holding companies having less than $50,000,000,000 in total consolidated assets, the Board of Governors shall consult with the Comptroller of the Currency and the Federal Deposit Insurance Corporation as to the terms of such regulations.

.

(ii)

Federal deposit insurance act

Section 19 of the Federal Deposit Insurance Act (12 U.S.C. 1829) is amended—

(I)

in subsection (d)(2), by inserting , in consultation with the Corporation and the Comptroller of the Currency, after System; and

(II)

in subsection (e)(2), by striking Director of the Office of Thrift Supervision and inserting Board of Governors of the Federal Reserve System, in consultation with the Corporation and the Comptroller of the Currency,.

(4)

Federal Deposit Insurance Act

(A)

Application

Section 8(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1818(b)(3)) is amended to read as follows:

(3)

Application to bank holding companies, savings and loan holding companies, and edge and agreement corporations

(A)

Application

This subsection, subsections (c) through (s) and subsection (u) of this section, and section 50 shall apply to—

(i)

any bank holding company, and any subsidiary (other than a bank) of a bank holding company, as those terms are defined in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841), as if such company or subsidiary was an insured depository institution for which the appropriate Federal banking agency for the bank holding company was the appropriate Federal banking agency;

(ii)

any savings and loan holding company, and any subsidiary (other than a depository institution) of a savings and loan holding company, as those terms are defined in section 10 of the Home Owners’ Loan Act (12 U.S.C. 1467a), as if such company or subsidiary was an insured depository institution for which the appropriate Federal banking agency for the savings and loan holding company was the appropriate Federal banking agency; and

(iii)

any organization organized and operated under section 25A of the Federal Reserve Act (12 U.S.C. 611 et seq.) or operating under section 25 of the Federal Reserve Act (12 U.S.C. 601 et seq.) and any noninsured State member bank, as if such organization was a bank holding company for which the Board of Governors of the Federal Reserve System was the appropriate Federal banking agency.

(B)

Rule of construction

Nothing in this paragraph may be construed to alter or affect the authority of an appropriate Federal banking agency to initiate enforcement proceedings, issue directives, or take other remedial action under any other provision of law.

.

(B)

Conforming amendment

Section 8(b)(9) of the Federal Deposit Insurance Act (12 U.S.C. 1818(b)(9)) is amended to read as follows:

(9)

[Reserved].

.

(e)

Determination of total consolidated assets

(1)

Regulations

(A)

In general

Not later than 180 days after the date of enactment of this Act, the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors, in order to avoid disruptive transfers of regulatory responsibility, shall issue joint regulations that specify—

(i)

the source of data for determining the total consolidated assets of a depository institution, bank holding company, or savings and loan holding company for purposes of this Act, and the amendments made by this Act, including the amendments to section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)); and

(ii)

the interval and frequency at which the total consolidated assets of a depository institution, bank holding company, or savings and loan holding company will be determined.

(B)

Content

The regulations issued under subparagraph (A)—

(i)

shall use information contained in the reports described in paragraph (2), other regulatory reports, audited financial statements, or other comparable sources;

(ii)

shall establish the frequency with which the total consolidated assets of depository institutions, bank holding companies, and savings and loan companies are determined, at an interval that—

(I)

avoids undue disruption in regulatory oversight;

(II)

facilitates nondisruptive transfers of regulatory responsibility; and

(III)

is not shorter than 2 years; and

(iii)

may provide for more frequent determinations of the total consolidated assets of a depository institution, bank holding company, or savings and loan holding company, to take into account a transaction outside the ordinary course of business, including a merger, acquisition, or other circumstance, as determined jointly by the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors, by rule.

(2)

Interim provisions

Until the date on which final regulations issued under paragraph (1) are effective, for purposes this Act, and the amendments made by this Act, including the amendments to section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), the total consolidated assets of—

(A)

a depository institution shall be determined by reference to the total consolidated assets reported in the most recent Consolidated Report of Income and Condition or Thrift Financial Report (or any successor thereto) filed by the depository institution with the Corporation or the Office of Thrift Supervision before the transfer date;

(B)

a bank holding company shall be determined by reference to the total consolidated assets reported in the most recent Consolidated Financial Statements for Bank Holding Companies (commonly referred to as the FR Y–9C, or any successor thereto) filed by the bank holding company with the Board of Governors before the transfer date; and

(C)

a savings and loan holding company shall be determined by reference to the total consolidated assets reported in the applicable schedule of the most recent Thrift Financial Report (or any successor thereto) filed by the savings and loan holding company with the Office of Thrift Supervision before the transfer date.

(f)

Consumer protection

Nothing in this section may be construed to limit or otherwise affect the transfer of powers under title X.

313.

Abolishment

Effective 90 days after the transfer date, the Office of Thrift Supervision and the position of Director of the Office of Thrift Supervision are abolished.

314.

Amendments to the revised statutes

(a)

Amendment to section 324

Section 324 of the Revised Statutes of the United States (12 U.S.C. 1) is amended to read as follows:

324.

Comptroller of the Currency

(a)

Office of the Comptroller of the Currency established

There is established in the Department of the Treasury a bureau to be known as the Office of the Comptroller of the Currency which is charged with assuring the safety and soundness of, and compliance with laws and regulations, fair access to financial services, and fair treatment of customers by, the institutions and other persons subject to its jurisdiction.

(b)

Comptroller of the Currency

(1)

In general

The chief officer of the Office of the Comptroller of the Currency shall be known as the Comptroller of the Currency. The Comptroller of the Currency shall perform the duties of the Comptroller of the Currency under the general direction of the Secretary of the Treasury. The Secretary of the Treasury may not delay or prevent the issuance of any rule or the promulgation of any regulation by the Comptroller of the Currency, and may not intervene in any matter or proceeding before the Comptroller of the Currency (including agency enforcement actions), unless otherwise specifically provided by law.

(2)

Additional authority

The Comptroller of the Currency shall have the same authority with respect to functions transferred to the Comptroller of the Currency under the Enhancing Financial Institution Safety and Soundness Act of 2010 (including matters that were within the jurisdiction of the Director of the Office of Thrift Supervision or the Office of Thrift Supervision on the day before the transfer date under that Act) as was vested in the Director of the Office of Thrift Supervision on the transfer date under that Act.

.

(b)

Amendment to section 329

Section 329 of the Revised Statutes of the United States (12 U.S.C. 11) is amended by inserting before the period at the end the following: or any Federal savings association.

(c)

Effective date

This section, and the amendments made by this section, shall take effect on the transfer date.

315.

Federal information policy

Section 3502(5) of title 44, United States Code, is amended by inserting Office of the Comptroller of the Currency, after the Securities and Exchange Commission,.

316.

Savings provisions

(a)

Office of Thrift Supervision

(1)

Existing rights, duties, and obligations not affected

Sections 312(b) and 313 shall not affect the validity of any right, duty, or obligation of the United States, the Director of the Office of Thrift Supervision, the Office of Thrift Supervision, or any other person, that existed on the day before the transfer date.

(2)

Continuation of suits

This title shall not abate any action or proceeding commenced by or against the Director of the Office of Thrift Supervision or the Office of Thrift Supervision before the transfer date, except that, for any action or proceeding arising out of a function of the Director of the Office of Thrift Supervision or the Office of Thrift Supervision that is transferred to the Comptroller of the Currency, the Office of the Comptroller of the Currency, the Chairperson of the Corporation, the Corporation, the Chairman of the Board of Governors, or the Board of Governors by this subtitle, the Comptroller of the Currency, the Office of the Comptroller of the Currency, the Chairperson of the Corporation, the Corporation, the Chairman of the Board of Governors, or the Board of Governors shall be substituted for the Director of the Office of Thrift Supervision or the Office of Thrift Supervision, as appropriate, as a party to the action or proceeding as of the transfer date.

(b)

Board of Governors

(1)

Existing rights, duties, and obligations not affected

Section 312(c) shall not affect the validity of any right, duty, or obligation of the United States, the Board of Governors, any Federal reserve bank, or any other person, that existed on the day before the transfer date.

(2)

Continuation of suits

This title shall not abate any action or proceeding commenced by or against the Board of Governors or a Federal reserve bank before the transfer date, except that, for any action or proceeding arising out of a function of the Board of Governors or a Federal reserve bank transferred to the Comptroller of the Currency, the Office of the Comptroller of the Currency, the Chairperson of the Corporation, or the Corporation by this subtitle, the Comptroller of the Currency, the Office of the Comptroller of the Currency, the Chairperson of the Corporation, or the Corporation shall be substituted for the Board of Governors or the Federal reserve bank, as appropriate, as a party to the action or proceeding, as of the transfer date.

(c)

Continuation of existing orders, resolutions, determinations, agreements, regulations, and other materials

(1)

Office of thrift supervision

All orders, resolutions, determinations, agreements, regulations, interpretative rules, other interpretations, guidelines, procedures, and other advisory materials that have been issued, made, prescribed, or allowed to become effective by the Office of Thrift Supervision, or by a court of competent jurisdiction, in the performance of functions of the Office of Thrift Supervision that are transferred by this subtitle and that are in effect on the day before the transfer date, shall continue in effect according to the terms of those materials, and shall be enforceable by or against the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, as appropriate, until modified, terminated, set aside, or superseded in accordance with applicable law by the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, as appropriate, by any court of competent jurisdiction, or by operation of law.

(2)

Board of governors

All orders, resolutions, determinations, agreements, regulations, interpretative rules, other interpretations, guidelines, procedures, and other advisory materials, that have been issued, made, prescribed, or allowed to become effective by the Board of Governors, or by a court of competent jurisdiction, in the performance of functions of the Board of Governors that are transferred by this subtitle and that are in effect on the day before the transfer date, shall continue in effect according to the terms of those materials, and shall be enforceable by or against the Office of the Comptroller of the Currency or the Corporation, as appropriate, until modified, terminated, set aside, or superseded in accordance with applicable law by the Office of the Comptroller of the Currency or the Corporation, as appropriate, by any court of competent jurisdiction, or by operation of law.

(d)

Identification of regulations continued

(1)

By the office of the comptroller of the currency

Not later than the transfer date, the Office of the Comptroller of the Currency shall—

(A)

in consultation with the Corporation, identify the regulations continued under subsection (c) that will be enforced by the Office of the Comptroller of the Currency; and

(B)

publish a list of such regulations in the Federal Register.

(2)

By the corporation

Not later than the transfer date, the Corporation shall—

(A)

in consultation with the Office of the Comptroller of the Currency, identify the regulations continued under subsection (c) that will be enforced by the Corporation; and

(B)

publish a list of such regulations in the Federal Register.

(3)

By the Board of Governors

Not later than the transfer date, the Board of Governors shall—

(A)

in consultation with the Office of the Comptroller of the Currency and the Corporation, identify the regulations continued under subsection (c) that will be enforced by the Board of Governors; and

(B)

publish a list of such regulations in the Federal Register.

(e)

Status of regulations proposed or not yet effective

(1)

Proposed regulations

Any proposed regulation of the Office of Thrift Supervision or the Board of Governors, which that agency, in performing functions transferred by this subtitle, has proposed before the transfer date, but has not published as a final regulation before that date, shall be deemed to be a proposed regulation of the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, as appropriate, according to its terms.

(2)

Regulations not yet effective

Any interim or final regulation of the Office of Thrift Supervision or the Board of Governors, which that agency, in performing functions transferred by this subtitle, has published before the transfer date, but which has not become effective before that date, shall become effective as a regulation of the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, as appropriate, according to its terms.

317.

References in Federal law to Federal banking agencies

(a)

Director of the Office of Thrift Supervision and the Office of Thrift Supervision

Except as provided in section 312(d)(2), on and after the transfer date, any reference in Federal law to the Director of the Office of Thrift Supervision or the Office of Thrift Supervision, in connection with any function of the Director of the Office of Thrift Supervision or the Office of Thrift Supervision transferred under section 312(b) or any other provision of this subtitle, shall be deemed to be a reference to the Comptroller of the Currency, the Office of the Comptroller of the Currency, the Chairperson of the Corporation, the Corporation, the Chairman of the Board of Governors, or the Board of Governors, as appropriate.

(b)

Board of Governors

Except as provided in section 312(d)(2), on and after the transfer date, any reference in Federal law to the Board of Governors or any Federal reserve bank, in connection with any function of the Board of Governors or any Federal reserve bank transferred under section 312(c) or any other provision of this subtitle, shall be deemed to be a reference to the Comptroller of the Currency, the Office of the Comptroller of the Currency, the Chairperson of the Corporation, or the Corporation, as appropriate.

318.

Funding

(a)

Funding of Office of the Comptroller of the Currency

(1)

Authority to Collect Assessments, Fees, and Other Charges, and to Receive Transferred Funds

Chapter 4 of title LXII of the Revised Statutes is amended by inserting after section 5240 (12 U.S.C. 481, 482) the following:

5240A.

The Comptroller of the Currency may collect an assessment, fee, or other charge from any entity described in section 3(q)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)(1)), as the Comptroller determines is necessary or appropriate to carry out the responsibilities of the Office of the Comptroller of the Currency. The Comptroller of the Currency also may collect an assessment, fee, or other charge from any entity, the activities of which are supervised by the Comptroller of the Currency under section 6 of the Bank Holding Company Act of 1956, as the Comptroller determines is necessary or appropriate to carry out the responsibilities of the Office of the Comptroller of the Currency in connection with such activities. In establishing the amount of an assessment, fee, or charge collected from an entity under this section, the Comptroller of the Currency may take into account the funds transferred to the Office of the Comptroller of the Currency under this section, the nature and scope of the activities of the entity, the amount and type of assets that the entity holds, the financial and managerial condition of the entity, and any other factor, as the Comptroller of the Currency determines is appropriate. Funds derived from any assessment, fee, or charge collected or payment made pursuant to this section may be deposited by the Comptroller of the Currency in accordance with the provisions of section 5234. Such funds shall not be construed to be Government funds or appropriated monies, and shall not be subject to apportionment for purposes of chapter 15 of title 31, United States Code, or any other provision of law. The authority of the Comptroller of the Currency under this section shall be in addition to the authority under section 5240.

The Comptroller of the Currency shall have sole authority to determine the manner in which the obligations of the Office of the Comptroller of the Currency shall be incurred and its disbursements and expenses allowed and paid, in accordance with this section.

.

(2)

Promoting parity in supervision fees

(A)

Proposal required

(i)

In general

The Comptroller of the Currency shall submit to the Board of Directors of the Corporation a proposal to promote parity in the examination fees paid by State and Federal depository institutions having total consolidated assets of less than $50,000,000,000.

(ii)

Contents

The proposal submitted under clause (i) shall recommend a transfer from the Corporation to the Office of the Comptroller of the Currency of a percentage of the amount that the Office of the Comptroller of the Currency estimates is necessary or appropriate to carry out the responsibilities of the Office of the Comptroller of the Currency associated with the supervision of Federal depository institutions having total consolidated assets of less than $50,000,000,000.

(iii)

Data collection

The Corporation shall assist the Office of the Comptroller of the Currency in collecting data relative to the supervision of State depository institutions to develop the proposal submitted under clause (i).

(B)

Vote

Not later than 60 days after the date of receipt of the proposal under subparagraph (A), the Board of Directors of the Corporation shall—

(i)

vote on the proposal; and

(ii)

promptly implement a plan to periodically transfer to the Office of the Comptroller of the Currency a percentage of the amount that the Office of the Comptroller of the Currency estimates is necessary or appropriate to carry out the responsibilities of the Office of the Comptroller of the Currency associated with the supervision of Federal depository institutions having total consolidated assets of less than $50,000,000,000, as approved by the Board of Directors of the Corporation.

(C)

Report to Congress

Not later than 30 days after date of the vote of the Board of Directors of the Corporation under subparagraph (B), the Corporation shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report describing—

(i)

the proposal made to the Board of Directors of the Corporation by the Comptroller of the Currency; and

(ii)

the decision resulting from the vote of the Board of Directors of the Corporation.

(D)

Failure to approve plan

If, on the date that is 2 years after the date of enactment of this Act, the Board of Directors of the Corporation has failed to approve a plan under subparagraph (B), the Council shall approve a plan using the dispute resolution procedures under section 119.

(b)

Funding of Board of Governors

Section 11 of the Federal Reserve Act (12 U.S.C. 248) is amended by adding at the end the following:

(s)

Assessments, fees, and other charges for certain companies

(1)

In general

The Board shall collect a total amount of assessments, fees, or other charges from the companies described in paragraph (2) that is equal to the total expenses the Board estimates are necessary or appropriate to carry out the responsibilities of the Board with respect to such companies.

(2)

Companies

The companies described in this paragraph are—

(A)

all bank holding companies having total consolidated assets of $50,000,000,000 or more;

(B)

all savings and loan holding companies having total consolidated assets of $50,000,000,000 or more; and

(C)

all nonbank financial companies supervised by the Board under section 113 of the Restoring American Financial Stability Act of 2010.

.

(c)

Corporation examination fees

Section 10(e) of the Federal Deposit Insurance Act (12 U.S.C. 1820(e)) is amended by striking paragraph (1) and inserting the following:

(1)

Regular and special examinations of depository institutions

The cost of conducting any regular examination or special examination of any depository institution under subsection (b)(2), (b)(3), or (d) or of any entity described in section 3(q)(2) may be assessed by the Corporation against the institution or entity to meet the expenses of the Corporation in carrying out such examinations, or as the Corporation determines is necessary or appropriate to carry out the responsibilities of the Corporation. The Corporation may also collect an assessment, fee, or other charge from any entity, the activities of which are supervised by the Corporation under section 6 of the Bank Holding Company Act of 1956, as the Corporation determines is necessary or appropriate to carry out the responsibilities of the Corporation in connection with such activities.

.

(d)

Effective date

This section, and the amendments made by this section, shall take effect on the transfer date.

319.

Contracting and leasing authority

Notwithstanding the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.) or any other provision of law, the Office of the Comptroller of the Currency may—

(1)

enter into and perform contracts, execute instruments, and acquire, in any lawful manner, such goods and services, or personal or real property (or property interest) as the Comptroller deems necessary to carry out the duties and responsibilities of the Office of the Comptroller of the Currency; and

(2)

hold, maintain, sell, lease, or otherwise dispose of the property (or property interest) acquired under paragraph (1).

B

Transitional provisions

321.

Interim use of funds, personnel, and property

(a)

Office of Thrift Supervision

(1)

In general

Before the transfer date, the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors shall—

(A)

consult and cooperate with the Office of Thrift Supervision to facilitate the orderly transfer of functions to the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors in accordance with this title;

(B)

determine jointly, from time to time—

(i)

the amount of funds necessary to pay any expenses associated with the transfer of functions (including expenses for personnel, property, and administrative services) during the period beginning on the date of enactment of this Act and ending on the transfer date;

(ii)

which personnel are appropriate to facilitate the orderly transfer of functions by this title; and

(iii)

what property and administrative services are necessary to support the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors during the period beginning on the date of enactment of this Act and ending on the transfer date; and

(C)

take such actions as may be necessary to provide for the orderly implementation of this title.

(2)

Agency consultation

When requested jointly by the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors to do so before the transfer date, the Office of Thrift Supervision shall—

(A)

pay to the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, as applicable, from funds obtained by the Office of Thrift Supervision through assessments, fees, or other charges that the Office of Thrift Supervision is authorized by law to impose, such amounts as the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors jointly determine to be necessary under paragraph (1);

(B)

detail to the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, as applicable, such personnel as the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors jointly determine to be appropriate under paragraph (1); and

(C)

make available to the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, as applicable, such property and provide to the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, as applicable, such administrative services as the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors jointly determine to be necessary under paragraph (1).

(3)

Notice required

The Office of the Comptroller of the Currency, the Corporation, and the Board of Governors shall jointly give the Office of Thrift Supervision reasonable prior notice of any request that the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors jointly intend to make under paragraph (2).

(b)

Board of Governors

(1)

In general

Before the transfer date, the Office of the Comptroller of the Currency and the Corporation shall—

(A)

consult and cooperate with the Board of Governors to facilitate the orderly transfer of functions to the Office of the Comptroller of the Currency and the Corporation in accordance with this title;

(B)

determine jointly, from time to time—

(i)

the amount of funds necessary to pay any expenses associated with the transfer of functions (including expenses for personnel, property, and administrative services) during the period beginning on the date of enactment of this Act and ending on the transfer date;

(ii)

which personnel are appropriate to facilitate the orderly transfer of functions by this title; and

(iii)

what property and administrative services are necessary to support the Office of the Comptroller of the Currency and the Corporation during the period beginning on the date of enactment of this Act and ending on the transfer date; and

(C)

take such actions as may be necessary to provide for the orderly implementation of this title.

(2)

Agency consultation

When requested jointly by the Office of the Comptroller of the Currency and the Corporation to do so before the transfer date, the Board of Governors shall—

(A)

pay to the Office of the Comptroller of the Currency or the Corporation, as applicable, from funds obtained by the Board of Governors through assessments, fees, or other charges that the Board of Governors is authorized by law to impose, such amounts as the Office of the Comptroller of the Currency and the Corporation jointly determine to be necessary under paragraph (1);

(B)

detail to the Office of the Comptroller of the Currency or the Corporation, as applicable, such personnel as the Office of the Comptroller of the Currency and the Corporation jointly determine to be appropriate under paragraph (1); and

(C)

make available to the Office of the Comptroller of the Currency or the Corporation, as applicable, such property and provide to the Office of the Comptroller of the Currency or the Corporation, as applicable, such administrative services as the Office of the Comptroller of the Currency and the Corporation jointly determine to be necessary under paragraph (1).

(3)

Notice required

The Office of the Comptroller of the Currency and the Corporation shall jointly give the Board of Governors reasonable prior notice of any request that the Office of the Comptroller of the Currency and the Corporation jointly intend to make under paragraph (2).

322.

Transfer of employees

(a)

In general

(1)

Office of thrift supervision employees

(A)

In general

All employees of the Office of Thrift Supervision shall be transferred to the Office of the Comptroller of the Currency or the Corporation for employment in accordance with this section.

(B)

Allocating employees for transfer to receiving agencies

The Director of the Office of Thrift Supervision, the Comptroller of the Currency, and the Chairperson of the Corporation shall—

(i)

jointly determine the number of employees of the Office of Thrift Supervision necessary to perform or support the functions that are transferred to the Office of the Comptroller of the Currency or the Corporation by this title; and

(ii)

consistent with the determination under clause (i), jointly identify employees of the Office of Thrift Supervision for transfer to the Office of the Comptroller of the Currency or the Corporation.

(2)

Board of governors

The Comptroller of the Currency, the Chairperson of the Corporation, and the Chairman of the Board of Governors shall—

(A)

jointly determine the number of employees of the Board of Governors (including employees of the Federal reserve banks who, on the day before the transfer date, are performing functions on behalf of the Board of Governors) necessary to perform or support the functions that are transferred to the Office of the Comptroller of the Currency or the Corporation under this title; and

(B)

consistent with the determination under subparagraph (A), jointly identify employees of the Board of Governors (including employees of the Federal reserve banks who, on the day before the transfer date, are performing functions on behalf of the Board of Governors) for transfer to the Office of the Comptroller of the Currency or the Corporation.

(3)

Employees transferred; service periods credited

For purposes of this section, periods of service with a Federal home loan bank, a joint office of Federal home loan banks, or a Federal reserve bank shall be credited as periods of service with a Federal agency.

(4)

Appointment authority for excepted service transferred

(A)

In general

Except as provided in subparagraph (B), any appointment authority of the Office of Thrift Supervision or the Board of Governors under Federal law that relates to the functions transferred under section 312, including the regulations of the Office of Personnel Management, for filling the positions of employees in the excepted service shall be transferred to the Comptroller of the Currency or the Chairperson of the Corporation, as appropriate.

(B)

Declining transfers allowed

The Office of the Comptroller of the Currency or the Chairperson of the Corporation may decline to accept a transfer of authority under subparagraph (A) (and the employees appointed under that authority) to the extent that such authority relates to positions excepted from the competitive service because of their confidential, policy-making, policy-determining, or policy-advocating character.

(5)

Additional appointment authority

Notwithstanding any other provision of law, the Office of the Comptroller of the Currency and the Corporation may appoint transferred employees to positions in the Office of the Comptroller of the Currency or the Corporation, respectively. For purposes of this paragraph, an employee transferred from any Federal reserve bank shall be treated as an employee of the Board of Governors.

(b)

Timing of transfers and position assignments

Each employee to be transferred under subsection (a)(1) shall—

(1)

be transferred not later than 90 days after the transfer date; and

(2)

receive notice of the position assignment of the employee not later than 120 days after the effective date of the transfer of the employee.

(c)

Transfer of functions

(1)

In general

Notwithstanding any other provision of law, the transfer of employees under this subtitle shall be deemed a transfer of functions for the purpose of section 3503 of title 5, United States Code.

(2)

Priority

If any provision of this subtitle conflicts with any protection provided to a transferred employee under section 3503 of title 5, United States Code, the provisions of this subtitle shall control.

(d)

Employee status and eligibility

The transfer of functions and employees under this subtitle, and the abolishment of the Office of Thrift Supervision under section 313, shall not affect the status of the transferred employees as employees of an agency of the United States under any provision of law.

(e)

Equal status and tenure positions

(1)

Status and tenure

(A)

Office of Thrift Supervision

Each transferred employee from the Office of Thrift Supervision shall be placed in a position at the Office of the Comptroller of the Currency or the Corporation with the same status and tenure as the transferred employee held on the day before the date on which the employee was transferred.

(B)

Board of Governors

Each transferred employee from the Board of Governors or from a Federal reserve bank shall be placed in a position with the same status and tenure as employees of the Office of the Comptroller of the Currency or the Corporation who perform similar functions and have similar periods of service.

(2)

Functions

To the extent practicable, each transferred employee shall be placed in a position at the Office of the Comptroller of the Currency or the Corporation, as applicable, responsible for the same functions and duties as the transferred employee had on the day before the date on which the employee was transferred, in accordance with the expertise and preferences of the transferred employee.

(f)

No additional certification requirements

An examiner who is a transferred employee shall not be subject to any additional certification requirements before being placed in a comparable position at the Office of the Comptroller of the Currency or the Corporation, if the examiner carries out examinations of the same type of institutions as an employee of the Office of the Comptroller of the Currency or the Corporation as the employee was responsible for carrying out before the date on which the employee was transferred.

(g)

Personnel actions limited

(1)

2-Year protection

Except as provided in paragraph (2), during the 2-year period beginning on the transfer date, an employee holding a permanent position on the day before the date on which the employee was transferred shall not be involuntarily separated or involuntarily reassigned outside the locality pay area (as defined by the Office of Personnel Management) of the employee.

(2)

Exceptions

The Comptroller of the Currency and the Chairperson of the Corporation, as applicable, may—

(A)

separate a transferred employee for cause, including for unacceptable performance; or

(B)

terminate an appointment to a position excepted from the competitive service because of its confidential policy-making, policy-determining, or policy-advocating character.

(h)

Pay

(1)

2-Year protection

Except as provided in paragraph (2), during the 2-year period beginning on the date on which the employee was transferred under this subtitle, a transferred employee shall be paid at a rate that is not less than the basic rate of pay, including any geographic differential, that the transferred employee received during the pay period immediately preceding the date on which the employee was transferred.

(2)

Exceptions

The Comptroller of the Currency, the Chairperson of the Corporation, or the Chairman of the Board of Governors may reduce the rate of basic pay of a transferred employee—

(A)

for cause, including for unacceptable performance; or

(B)

with the consent of the transferred employee.

(3)

Protection only while employed

This subsection shall apply to a transferred employee only during the period that the transferred employee remains employed by Office of the Comptroller of the Currency or the Corporation.

(4)

Pay increases permitted

Nothing in this subsection shall limit the authority of the Comptroller of the Currency or the Chairperson of the Corporation to increase the pay of a transferred employee.

(i)

Benefits

(1)

Retirement benefits for transferred employees

(A)

In general

(i)

Continuation of existing retirement plan

Each transferred employee shall remain enrolled in the retirement plan of the transferred employee, for as long as the transferred employee is employed by the Office of the Comptroller of the Currency or the Corporation.

(ii)

Employer’s contribution

The Comptroller of the Currency or the Chairperson of the Corporation, as appropriate, shall pay any employer contributions to the existing retirement plan of each transferred employee, as required under each such existing retirement plan.

(B)

Option for employees transferred from Federal reserve system to be subject to Federal employee retirement program

(i)

Election

Any transferred employee who was enrolled in a Federal Reserve System retirement plan on the day before the date of the transfer of the employee to the Office of the Comptroller of the Currency or the Corporation may, during the period beginning 6 months after the transfer date and ending 1 year after the transfer date, elect to be subject to the Federal employee retirement program.

(ii)

Effective date of coverage

For any employee making an election under clause (i), coverage by the Federal employee retirement program shall begin 1 year after the transfer date.

(C)

Agency participation in Federal reserve system retirement plan

(i)

Separate account in Federal reserve system retirement plan established

A separate account in the Federal Reserve System retirement plan shall be established for employees transferred to the Office of the Comptroller of the Currency or the Corporation under this title who do not make the election under subparagraph (B).

(ii)

Funds attributable to transferred employees remaining in Federal reserve system retirement plan transferred

The proportionate share of funds in the Federal Reserve System retirement plan, including the proportionate share of any funding surplus in that plan, attributable to a transferred employee who does not make the election under subparagraph (B), shall be transferred to the account established under clause (i).

(iii)

Employer contributions deposited

The Office of the Comptroller of the Currency or the Corporation, as appropriate, shall deposit into the account established under clause (i) the employer contributions that the Office of the Comptroller of the Currency or the Corporation, respectively, makes on behalf of transferred employees who do not make an election under subparagraph (B).

(iv)

Account administration

The Office of the Comptroller of the Currency or the Corporation, as appropriate, shall administer the account established under clause (i) as a participation employer in the Federal Reserve System retirement plan.

(D)

Definition

In this paragraph, the term existing retirement plan means, with respect to a transferred employee, the retirement plan (including the Financial Institutions Retirement Fund), and any associated thrift savings plan, of the agency from which the employee was transferred in which the employee was enrolled on the day before the date on which the employee was transferred.

(2)

Benefits other than retirement benefits

(A)

During first year

(i)

Existing plans continue

During the 1-year period following the transfer date, each transferred employee may retain membership in any employee benefit program (other than a retirement benefit program) of the agency from which the employee was transferred under this title, including any dental, vision, long term care, or life insurance program to which the employee belonged on the day before the transfer date.

(ii)

Employer’s contribution

The Office of the Comptroller of the Currency or the Corporation, as appropriate, shall pay any employer cost required to extend coverage in the benefit program to the transferred employee as required under that program or negotiated agreements.

(B)

Dental, vision, or life insurance after first year

If, after the 1-year period beginning on the transfer date, the Office of the Comptroller of the Currency or the Corporation determines that the Office of the Comptroller of the Currency or the Corporation, as the case may be, will not continue to participate in any dental, vision, or life insurance program of an agency from which an employee was transferred, a transferred employee who is a member of the program may, before the decision takes effect and without regard to any regularly scheduled open season, elect to enroll in—

(i)

the enhanced dental benefits program established under chapter 89A of title 5, United States Code;

(ii)

the enhanced vision benefits established under chapter 89B of title 5, United States Code; and

(iii)

the Federal Employees’ Group Life Insurance Program established under chapter 87 of title 5, United States Code, without regard to any requirement of insurability.

(C)

Long term care insurance after 1st year

If, after the 1-year period beginning on the transfer date, the Office of the Comptroller of the Currency or the Corporation determines that the Office of the Comptroller of the Currency or the Corporation, as appropriate, will not continue to participate in any long term care insurance program of an agency from which an employee transferred, a transferred employee who is a member of such a program may, before the decision takes effect, elect to apply for coverage under the Federal Long Term Care Insurance Program established under chapter 90 of title 5, United States Code, under the underwriting requirements applicable to a new active workforce member, as described in part 875 of title 5, Code of Federal Regulations (or any successor thereto).

(D)

Contribution of transferred employee

(i)

In general

Subject to clause (ii), a transferred employee who is enrolled in a plan under the Federal Employees Health Benefits Program shall pay any employee contribution required under the plan.

(ii)

Cost differential

The Office of the Comptroller of the Currency or the Corporation, as applicable, shall pay any difference in cost between the employee contribution required under the plan provided to transferred employees by the agency from which the employee transferred on the date of enactment of this Act and the plan provided by the Office of the Comptroller of the Currency or the Corporation, as the case may be, under this section.

(iii)

Funds transfer

The Office of the Comptroller of the Currency or the Corporation, as the case may be, shall transfer to the Employees Health Benefits Fund established under section 8909 of title 5, United States Code, an amount determined by the Director of the Office of Personnel Management, after consultation with the Comptroller of the Currency or the Chairperson of the Corporation, as the case may be, and the Office of Management and Budget, to be necessary to reimburse the Fund for the cost to the Fund of providing any benefits under this subparagraph that are not otherwise paid for by a transferred employee under clause (i).

(E)

Special provisions to ensure continuation of life insurance benefits

(i)

In general

An annuitant, as defined in section 8901 of title 5, United States Code, who is enrolled in a life insurance plan administered by an agency from which employees are transferred under this title on the day before the transfer date shall be eligible for coverage by a life insurance plan under sections 8706(b), 8714a, 8714b, or 8714c of title 5, United States Code, or by a life insurance plan established by the Office of the Comptroller of the Currency or the Corporation, as applicable, without regard to any regularly scheduled open season or any requirement of insurability.

(ii)

Contribution of transferred employee

(I)

In general

Subject to subclause (II), a transferred employee enrolled in a life insurance plan under this subparagraph shall pay any employee contribution required by the plan.

(II)

Cost differential

The Office of the Comptroller of the Currency or the Corporation, as the case may be, shall pay any difference in cost between the benefits provided by the agency from which the employee transferred on the date of enactment of this Act and the benefits provided under this section.

(III)

Funds transfer

The Office of the Comptroller of the Currency or the Corporation, as the case may be, shall transfer to the Federal Employees’ Group Life Insurance Fund established under section 8714 of title 5, United States Code, an amount determined by the Director of the Office of Personnel Management, after consultation with the Comptroller of the Currency or the Chairperson of the Corporation, as the case may be, and the Office of Management and Budget, to be necessary to reimburse the Federal Employees’ Group Life Insurance Fund for the cost to the Federal Employees’ Group Life Insurance Fund of providing benefits under this subparagraph not otherwise paid for by a transferred employee under subclause (I).

(IV)

Credit for time enrolled in other plans

For any transferred employee, enrollment in a life insurance plan administered by the agency from which the employee transferred, immediately before enrollment in a life insurance plan under chapter 87 of title 5, United States Code, shall be considered as enrollment in a life insurance plan under that chapter for purposes of section 8706(b)(1)(A) of title 5, United States Code.

(j)

Incorporation into agency pay system

Not later than 2 years after the transfer date, the Comptroller of the Currency and the Chairperson of the Corporation shall place each transferred employee into the established pay system and structure of the appropriate employing agency.

(k)

Equitable treatment

In administering the provisions of this section, the Comptroller of the Currency and the Chairperson of the Corporation—

(1)

may not take any action that would unfairly disadvantage a transferred employee relative to any other employee of the Office of the Comptroller of the Currency or the Corporation on the basis of prior employment by the Office of Thrift Supervision, the Board of Governors, or a Federal reserve bank; and

(2)

may take such action as is appropriate in an individual case to ensure that a transferred employee receives equitable treatment, with respect to the status, tenure, pay, benefits (other than benefits under programs administered by the Office of Personnel Management), and accrued leave or vacation time for prior periods of service with any Federal agency of the transferred employee.

(l)

Reorganization

(1)

In general

If the Comptroller of the Currency or the Chairperson of the Corporation determines, during the 2-year period beginning 1 year after the transfer date, that a reorganization of the staff of the Office of the Comptroller of the Currency or the Corporation, respectively, is required, the reorganization shall be deemed a major reorganization for purposes of affording affected employees retirement under section 8336(d)(2) or 8414(b)(1)(B) of title 5, United States Code.

(2)

Service credit

For purposes of this subsection, periods of service with a Federal home loan bank, a joint office of Federal home loan banks or a Federal reserve bank shall be credited as periods of service with a Federal agency.

323.

Property transferred

(a)

Property defined

For purposes of this section, the term property includes all real property (including leaseholds) and all personal property, including computers, furniture, fixtures, equipment, books, accounts, records, reports, files, memoranda, paper, reports of examination, work papers, and correspondence related to such reports, and any other information or materials.

(b)

Property of the Office of Thrift Supervision

Not later than 90 days after the transfer date, all property of the Office of Thrift Supervision that the Comptroller of the Currency and the Chairperson of the Corporation jointly determine is used, on the day before the transfer date, to perform or support the functions of the Office of Thrift Supervision transferred to the Office of the Comptroller of the Currency or the Corporation under this title, shall be transferred to the Office of the Comptroller of the Currency or the Corporation in a manner consistent with the transfer of employees under this subtitle.

(c)

Property of the Board of Governors

(1)

In general

Not later than 90 days after the transfer date, all property of the Board of Governors that the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors jointly determine is used, on the day before the transfer date, to perform or support the functions of the Board of Governor transferred to the Office of the Comptroller of the Currency or the Corporation under this title, shall be transferred to the Office of the Comptroller of the Currency or the Corporation in a manner consistent with the transfer of employees under this subtitle.

(2)

Property of Federal reserve banks

Any property of any Federal reserve bank that, on the day before the transfer date, is used to perform or support the functions of the Board of Governors transferred to the Office of the Comptroller of the Currency or the Corporation by this title shall be treated as property of the Board of Governors for purposes of paragraph (1).

(d)

Contracts related to property transferred

Each contract, agreement, lease, license, permit, and similar arrangement relating to property transferred to the Office of the Comptroller of the Currency or the Corporation by this section shall be transferred to the Office of the Comptroller of the Currency or the Corporation, as appropriate, together with the property to which it relates.

(e)

Preservation of property

Property identified for transfer under this section shall not be altered, destroyed, or deleted before transfer under this section.

324.

Funds transferred

The funds that, on the day before the transfer date, the Director of the Office of Thrift Supervision (in consultation with the Comptroller of the Currency, the Chairperson of the Corporation, and the Chairman of the Board of Governors) determines are not necessary to dispose of the affairs of the Office of Thrift Supervision under section 325 and are available to the Office of Thrift Supervision to pay the expenses of the Office of Thrift Supervision—

(1)

relating to the functions of the Office of Thrift Supervision transferred under section 312(b)(1)(B), shall be transferred to the Office of the Comptroller of the Currency on the transfer date;

(2)

relating to the functions of the Office of Thrift Supervision transferred under section 312(b)(1)(C), shall be transferred to the Corporation on the transfer date; and

(3)

relating to the functions of the Office of Thrift Supervision transferred under section 312(b)(1)(A), shall be transferred to the Board of Governors on the transfer date.

325.

Disposition of affairs

(a)

Authority of Director

During the 90-day period beginning on the transfer date, the Director of the Office of Thrift Supervision—

(1)

shall, solely for the purpose of winding up the affairs of the Office of Thrift Supervision relating to any function transferred to the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors under this title—

(A)

manage the employees of the Office of Thrift Supervision who have not yet been transferred and provide for the payment of the compensation and benefits of the employees that accrue before the date on which the employees are transferred under this title; and

(B)

manage any property of the Office of Thrift Supervision, until the date on which the property is transferred under section 323; and

(2)

may take any other action necessary to wind up the affairs of the Office of Thrift Supervision.

(b)

Status of Director

(1)

In general

Notwithstanding the transfer of functions under this subtitle, during the 90-day period beginning on the transfer date, the Director of the Office of Thrift Supervision shall retain and may exercise any authority vested in the Director of the Office of Thrift Supervision on the day before the transfer date, only to the extent necessary—

(A)

to wind up the Office of Thrift Supervision; and

(B)

to carry out the transfer under this subtitle during such 90-day period.

(2)

Other provisions

For purposes of paragraph (1), the Director of the Office of Thrift Supervision shall, during the 90-day period beginning on the transfer date, continue to be—

(A)

treated as an officer of the United States; and

(B)

entitled to receive compensation at the same annual rate of basic pay that the Director of the Office of Thrift Supervision received on the day before the transfer date.

(c)

Authority of Chairman of the Board of Governors

During the 90-day period beginning on the transfer date, the Chairman of the Board of Governors shall—

(1)

manage the employees of the Board of Governors who have not yet been transferred under this title and provide for the payment of the compensation and benefits of the employees that accrue before the date on which the employees are transferred under this title; and

(2)

manage any property of the Board of Governors that is transferred under this title, until the date on which the property is transferred under section 323.

326.

Continuation of services

Any agency, department, or other instrumentality of the United States, and any successor to any such agency, department, or instrumentality, that was, before the transfer date, providing support services to the Office of Thrift Supervision or the Board of Governors in connection with functions transferred to the Office of the Comptroller of the Currency, the Corporation or the Board of Governors under this title, shall—

(1)

continue to provide such services, subject to reimbursement by the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, until the transfer of functions under this title is complete; and

(2)

consult with the Comptroller of the Currency, the Chairperson of the Corporation, or the Chairman of the Board of Governors, as appropriate, to coordinate and facilitate a prompt and orderly transition.

C

Federal Deposit Insurance Corporation

331.

Deposit insurance reforms

(a)

Size distinctions

Section 7(b)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2)) is amended—

(1)

by striking subparagraph (D); and

(2)

by redesignating subparagraph (C) as subparagraph (D).

(b)

Assessment base

(1)

In general

Except as provided in paragraph (2), the Corporation shall amend the regulations issued by the Corporation under section 7(b)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2)) to define the term assessment base with respect to an insured depository institution for purposes of that section 7(b)(2), as an amount equal to—

(A)

the average total consolidated assets of the insured depository institution during the assessment period; minus

(B)

the sum of—

(i)

the average tangible equity of the insured depository institution during the assessment period; and

(ii)

the average long-term unsecured debt of the insured depository institution during the assessment period.

(2)

Determination

If, not later than 1 year after the date of enactment of this Act, the Corporation submits to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives, in writing, a finding that an amendment to the rules of the Corporation regarding the definition of the term assessment base, as provided in paragraph (1), would reduce the effectiveness of the risk-based assessment system of the Corporation or increase the risk of loss to the Deposit Insurance Fund, the Corporation may—

(A)

continue in effect the definition of the term assessment base, as in effect on the day before the date of enactment of this Act; or

(B)

establish, by rule, a definition of the term assessment base that the Corporation deems appropriate.

332.

Management of the Federal Deposit Insurance Corporation

(a)

In general

Section 2 of the Federal Deposit Insurance Act (12 U.S.C. 1812) is amended—

(1)

in subsection (a)(1)(B), by striking Director of the Office of Thrift Supervision and inserting Director of the Consumer Financial Protection Bureau;

(2)

by amending subsection (d)(2) to read as follows:

(2)

Acting officials may serve

In the event of a vacancy in the Office of the Comptroller of the Currency and pending the appointment of a successor, or during the absence or disability of the Comptroller of the Currency, the acting Comptroller of the Currency shall be a member of the Board of Directors in the place of the Comptroller of the Currency.

; and

(3)

in subsection (f)(2), by striking or of the Office of Thrift Supervision.

(b)

Effective date

This section, and the amendments made by this section, shall take effect on the transfer date.

D

Termination of Federal Thrift Charter

341.

Termination of Federal savings associations

(a)

In general

Beginning on the date of enactment of this Act, the Director of the Office of Thrift Supervision, or the Comptroller of the Currency, may not issue a charter for a Federal savings association under section 5 of the Home Owners’ Loan Act (12 U.S.C. 1464).

(b)

Conforming amendment

Section 5(a) of the Home Owner’s Loan Act (12 U.S.C. 1464(a)) is amended to read as follows:

(a)

In general

In order to provide thrift institutions for the deposit of funds and for the extension of credit for homes and other goods and services, the Comptroller of the Currency is authorized, under such regulations as the Comptroller of the Currency may prescribe, to provide for the examination, operation, and regulation of associations to be known as Federal savings associations (including Federal savings banks), giving primary consideration to the best practices of thrift institutions in the United States. The lending and investment powers conferred by this section are intended to encourage such institutions to provide credit for housing safely and soundly.

.

(c)

Prospective repeal

Effective on the date on which the Comptroller of the Currency determines that no Federal savings associations exist, section 5 of the Home Owner’s Loan Act (12 U.S.C. 1464) is repealed.

342.

Branching

Notwithstanding the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.), the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.), or any other provision of Federal or State law, a savings association that becomes a bank may continue to operate any branch or agency that the savings association operated immediately before the savings association became a bank.

IV

Regulation of advisers to hedge funds and others

401.

Short title

This title may be cited as the Private Fund Investment Advisers Registration Act of 2010.

402.

Definitions

(a)

Investment Advisers Act of 1940 definitions

Section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2(a)) is amended by adding at the end the following:

(29)

The term private fund means an issuer that would be an investment company, as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3), but for section 3(c)(1) or 3(c)(7) of that Act.

(30)

The term foreign private adviser means any investment adviser who—

(A)

has no place of business in the United States;

(B)

has, in total, fewer than 15 clients who are domiciled in or residents of the United States;

(C)

has aggregate assets under management attributable to clients in the United States and investors in the United States in private funds advised by the investment adviser of less than $25,000,000, or such higher amount as the Commission may, by rule, deem appropriate in accordance with the purposes of this title; and

(D)

neither—

(i)

holds itself out generally to the public in the United States as an investment adviser; nor

(ii)

acts as—

(I)

an investment adviser to any investment company registered under the Investment Company Act of 1940; or

(II)

a company that has elected to be a business development company pursuant to section 54 of the Investment Company Act of 1940 (15 U.S.C. 80a–53), and has not withdrawn its election.

.

(b)

Other definitions

As used in this title, the terms investment adviser and private fund have the same meanings as in section 202 of the Investment Advisers Act of 1940, as amended by this title.

403.

Elimination of private adviser exemption; limited exemption for foreign private advisers; limited intrastate exemption

Section 203(b) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–3(b)) is amended—

(1)

in paragraph (1), by inserting , other than an investment adviser who acts as an investment adviser to any private fund, before all of whose;

(2)

by striking paragraph (3) and inserting the following:

(3)

any investment adviser that is a foreign private adviser;

; and

(3)

in paragraph (5), by striking or at the end;

(4)

in paragraph (6), by striking the period at the end and inserting ; or; and

(5)

by adding at the end the following:

(7)

any investment adviser, other than any entity that has elected to be regulated or is regulated as a business development company pursuant to section 54 of the Investment Company Act of 1940 (15 U.S.C. 80a–54), who solely advises—

(A)

small business investment companies that are licensees under the Small Business Investment Act of 1958;

(B)

entities that have received from the Small Business Administration notice to proceed to qualify for a license as a small business investment company under the Small Business Investment Act of 1958, which notice or license has not been revoked; or

(C)

applicants that are affiliated with 1 or more licensed small business investment companies described in subparagraph (A) and that have applied for another license under the Small Business Investment Act of 1958, which application remains pending.

.

404.

Collection of systemic risk data; reports; examinations; disclosures

Section 204 of the Investment Advisers Act of 1940 (15 U.S.C. 80b–4) is amended—

(1)

by redesignating subsections (b) and (c) as subsections (c) and (d), respectively; and

(2)

by inserting after subsection (a) the following:

(b)

Records and reports of private funds

(1)

In general

The Commission may require any investment adviser registered under this title—

(A)

to maintain such records of, and file with the Commission such reports regarding, private funds advised by the investment adviser, as necessary and appropriate in the public interest and for the protection of investors, or for the assessment of systemic risk by the Financial Stability Oversight Council (in this subsection referred to as the Council); and

(B)

to provide or make available to the Council those reports or records or the information contained therein.

(2)

Treatment of records

The records and reports of any private fund to which an investment adviser registered under this title provides investment advice shall be deemed to be the records and reports of the investment adviser.

(3)

Required information

The records and reports required to be maintained by a private fund and subject to inspection by the Commission under this subsection shall include, for each private fund advised by the investment adviser, a description of—

(A)

the amount of assets under management and use of leverage;

(B)

counterparty credit risk exposure;

(C)

trading and investment positions;

(D)

valuation policies and practices of the fund;

(E)

types of assets held;

(F)

side arrangements or side letters, whereby certain investors in a fund obtain more favorable rights or entitlements than other investors;

(G)

trading practices; and

(H)

such other information as the Commission, in consultation with the Council, determines is necessary and appropriate in the public interest and for the protection of investors or for the assessment of systemic risk, which may include the establishment of different reporting requirements for different classes of fund advisers, based on the type or size of private fund being advised.

(4)

Maintenance of records

An investment adviser registered under this title shall maintain such records of private funds advised by the investment adviser for such period or periods as the Commission, by rule, may prescribe as necessary and appropriate in the public interest and for the protection of investors, or for the assessment of systemic risk.

(5)

Filing of records

The Commission shall issue rules requiring each investment adviser to a private fund to file reports containing such information as the Commission deems necessary and appropriate in the public interest and for the protection of investors or for the assessment of systemic risk.

(6)

Examination of records

(A)

Periodic and special examinations

The Commission—

(i)

shall conduct periodic inspections of all records of private funds maintained by an investment adviser registered under this title in accordance with a schedule established by the Commission; and

(ii)

may conduct at any time and from time to time such additional, special, and other examinations as the Commission may prescribe as necessary and appropriate in the public interest and for the protection of investors, or for the assessment of systemic risk.

(B)

Availability of records

An investment adviser registered under this title shall make available to the Commission any copies or extracts from such records as may be prepared without undue effort, expense, or delay, as the Commission or its representatives may reasonably request.

(7)

Information sharing

(A)

In general

The Commission shall make available to the Council copies of all reports, documents, records, and information filed with or provided to the Commission by an investment adviser under this subsection as the Council may consider necessary for the purpose of assessing the systemic risk posed by a private fund.

(B)

Confidentiality

The Council shall maintain the confidentiality of information received under this paragraph in all such reports, documents, records, and information, in a manner consistent with the level of confidentiality established by the Commission pursuant to paragraph (8). The Council shall be exempt from section 552 of title 5, United States Code, with respect to any information in any report, document, record, or information made available, to the Council under this subsection.”.

(8)

Commission confidentiality of reports

Notwithstanding any other provision of law, the Commission may not be compelled to disclose any report or information contained therein required to be filed with the Commission under this subsection, except that nothing in this subsection authorizes the Commission—

(A)

to withhold information from Congress, upon an agreement of confidentiality; or

(B)

prevent the Commission from complying with—

(i)

a request for information from any other Federal department or agency or any self-regulatory organization requesting the report or information for purposes within the scope of its jurisdiction; or

(ii)

an order of a court of the United States in an action brought by the United States or the Commission.

(9)

Other recipients confidentiality

Any department, agency, or self-regulatory organization that receives reports or information from the Commission under this subsection shall maintain the confidentiality of such reports, documents, records, and information in a manner consistent with the level of confidentiality established for the Commission under paragraph (8).

(10)

Public information exception

(A)

In general

The Commission, the Council, and any other department, agency, or self-regulatory organization that receives information, reports, documents, records, or information from the Commission under this subsection, shall be exempt from the provisions of section 552 of title 5, United States Code, with respect to any such report, document, record, or information. Any proprietary information of an investment adviser ascertained by the Commission from any report required to be filed with the Commission pursuant to this subsection shall be subject to the same limitations on public disclosure as any facts ascertained during an examination, as provided by section 210(b) of this title.

(B)

Proprietary information

For purposes of this paragraph, proprietary information includes—

(i)

sensitive, non-public information regarding the investment or trading strategies of the investment adviser;

(ii)

analytical or research methodologies;

(iii)

trading data;

(iv)

computer hardware or software containing intellectual property; and

(v)

any additional information that the Commission determines to be proprietary.

(11)

Annual report to Congress

The Commission shall report annually to Congress on how the Commission has used the data collected pursuant to this subsection to monitor the markets for the protection of investors and the integrity of the markets.

.

405.

Disclosure provision eliminated

Section 210(c) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–10(c)) is amended by inserting before the period at the end the following: or for purposes of assessment of potential systemic risk.

406.

Clarification of rulemaking authority

Section 211 of the Investment Advisers Act of 1940 (15 U.S.C. 80b–11) is amended—

(1)

in subsection (a), by inserting before the period at the end of the first sentence the following: , including rules and regulations defining technical, trade, and other terms used in this title, except that the Commission may not define the term client for purposes of paragraphs (1) and (2) of section 206 to include an investor in a private fund managed by an investment adviser, if such private fund has entered into an advisory contract with such adviser; and

(2)

by adding at the end the following:

(e)

Disclosure rules on private funds

The Commission and the Commodity Futures Trading Commission shall, after consultation with the Council but not later than 12 months after the date of enactment of the Private Fund Investment Advisers Registration Act of 2010, jointly promulgate rules to establish the form and content of the reports required to be filed with the Commission under subsection 204(b) and with the Commodity Futures Trading Commission by investment advisers that are registered both under this title and the Commodity Exchange Act (7 U.S.C. 1a et seq.).

.

407.

Exemption of venture capital fund advisers

Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b–3) is amended by adding at the end the following:

(l)

Exemption of venture capital fund advisers

No investment adviser shall be subject to the registration requirements of this title with respect to the provision of investment advice relating to a venture capital fund. Not later than 6 months after the date of enactment of this subsection, the Commission shall issue final rules to define the term venture capital fund for purposes of this subsection.

.

408.

Exemption of and record keeping by private equity fund advisers

Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b–3) is amended by adding at the end the following:

(m)

Exemption of and reporting by private equity fund advisers

(1)

In general

Except as provided in this subsection, no investment adviser shall be subject to the registration or reporting requirements of this title with respect to the provision of investment advice relating to a private equity fund or funds.

(2)

Maintenance of records and access by Commission

Not later than 6 months after the date of enactment of this subsection, the Commission shall issue final rules—

(A)

to require investment advisers described in paragraph (1) to maintain such records and provide to the Commission such annual or other reports as the Commission taking into account fund size, governance, investment strategy, risk, and other factors, as the Commission determines necessary and appropriate in the public interest and for the protection of investors; and

(B)

to define the term private equity fund for purposes of this subsection.

.

409.

Family offices

(a)

In general

Section 202(a)(11) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2(a)(11)) is amended by striking or (G) and inserting the following: ; (G) any family office, as defined by rule, regulation, or order of the Commission, in accordance with the purposes of this title; or (H).

(b)

Rulemaking

The rules, regulations, or orders issued by the Commission pursuant to section 202(a)(11)(G) of the Investment Advisers Act of 1940, as added by this section, regarding the definition of the term family office shall provide for an exemption that—

(1)

is consistent with the previous exemptive policy of the Commission, as reflected in exemptive orders for family offices in effect on the date of enactment of this Act; and

(2)

recognizes the range of organizational, management, and employment structures and arrangements employed by family offices.

410.

State and Federal responsibilities; asset threshold for Federal registration of investment advisers

Section 203A(a)(1) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–3a(a)(1)) is amended —

(1)

in subparagraph (A)—

(A)

by striking $25,000,000 and inserting $100,000,000; and

(B)

by striking or at the end;

(2)

in subparagraph (B), by striking the period at the end and inserting ; or; and

(3)

by adding at the end the following:

(C)

is an adviser to a company that has elected to be a business development company pursuant to section 54 of the Investment Company Act of 1940, and has not withdrawn its election.

.

411.

Custody of client assets

The Investment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.) is amended by adding at the end the following new section:

223.

Custody of client accounts

An investment adviser registered under this title shall take such steps to safeguard client assets over which such adviser has custody, including, without limitation, verification of such assets by an independent public accountant, as the Commission may, by rule, prescribe.

.

412.

Adjusting the accredited investor standard for inflation

The Commission shall, by rule—

(1)

increase the financial threshold for an accredited investor, as set forth in the rules of the Commission under the Securities Act of 1933, by calculating an amount that is greater than the amount in effect on the date of enactment of this Act of $200,000 income for a natural person (or $300,000 for a couple) and $1,000,000 in assets, as the Commission determines is appropriate and in the public interest, in light of price inflation since those figures were determined; and

(2)

adjust that threshold not less frequently than once every 5 years, to reflect the percentage increase in the cost of living.

413.

GAO study and report on accredited investors

The Comptroller General of the United States shall conduct a study on the appropriate criteria for determining the financial thresholds or other criteria needed to qualify for accredited investor status and eligibility to invest in private funds, and shall submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the results of such study not later than 1 year after the date of enactment of this Act.

414.

GAO study on self-regulatory organization for private funds

The Comptroller General of the United States shall—

(1)

conduct a study of the feasibility of forming a self-regulatory organization to oversee private funds; and

(2)

submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the results of such study, not later than 1 year after the date of enactment of this Act.

415.

Commission study and report on short selling

(a)

Study

The Division of Risk, Strategy, and Financial Innovation of the Commission shall conduct a study, taking into account current scholarship, on the state of short selling on national securities exchanges and in the over-the-counter markets, with particular attention to the impact of recent rule changes and the incidence of—

(1)

the failure to deliver shares sold short; or

(2)

delivery of shares on the fourth day following the short sale transaction.

(b)

Report

The Division of Risk, Strategy, and Financial Innovation shall submit a report, together with any recommendations for market improvements, including consideration of real time reporting of short sale positions, to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the results of the study conducted under subsection (a), not later than 2 years after the date of enactment of this Act.

416.

Transition period

Except as otherwise provided in this title, this title and the amendments made by this title shall become effective 1 year after the date of enactment of this Act, except that any investment adviser may, at the discretion of the investment adviser, register with the Commission under the Investment Advisers Act of 1940 during that 1-year period, subject to the rules of the Commission.

V

Insurance

A

Office of National Insurance

501.

Short title

This subtitle may be cited as the Office of National Insurance Act of 2010.

502.

Establishment of Office of National Insurance

(a)

Establishment of office

Subchapter I of chapter 3 of subtitle I of title 31, United States Code, is amended—

(1)

by redesignating section 312 as section 315;

(2)

by redesignating section 313 as section 312; and

(3)

by inserting after section 312 (as so redesignated) the following new sections:

313.

Office of National Insurance

(a)

Establishment

There is established within the Department of the Treasury the Office of National Insurance.

(b)

Leadership

The Office shall be headed by a Director, who shall be appointed by the Secretary of the Treasury. The position of Director shall be a career reserved position in the Senior Executive Service, as that position is defined under section 3132 of title 5, United States Code.

(c)

Functions

(1)

Authority pursuant to direction of Secretary

The Office, pursuant to the direction of the Secretary, shall have the authority—

(A)

to monitor all aspects of the insurance industry, including identifying issues or gaps in the regulation of insurers that could contribute to a systemic crisis in the insurance industry or the United States financial system;

(B)

to recommend to the Financial Stability Oversight Council that it designate an insurer, including the affiliates of such insurer, as an entity subject to regulation as a nonbank financial company supervised by the Board of Governors pursuant to title I of the Restoring American Financial Stability Act of 2010;

(C)

to assist the Secretary in administering the Terrorism Insurance Program established in the Department of the Treasury under the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note);

(D)

to coordinate Federal efforts and develop Federal policy on prudential aspects of international insurance matters, including representing the United States, as appropriate, in the International Association of Insurance Supervisors (or a successor entity) and assisting the Secretary in negotiating International Insurance Agreements on Prudential Measures;

(E)

to determine, in accordance with subsection (f), whether State insurance measures are preempted by International Insurance Agreements on Prudential Measures;

(F)

to consult with the States (including State insurance regulators) regarding insurance matters of national importance and prudential insurance matters of international importance; and

(G)

to perform such other related duties and authorities as may be assigned to the Office by the Secretary.

(2)

Advisory functions

The Office shall advise the Secretary on major domestic and prudential international insurance policy issues.

(d)

Scope

The authority of the Office shall extend to all lines of insurance except health insurance, as such insurance is determined by the Secretary based on section 2791 of the Public Health Service Act (42 U.S.C. 300gg–91), and crop insurance, as established by the Federal Crop Insurance Act (7 U.S.C. 1501 et seq.).

(e)

Gathering of information

(1)

In general

In carrying out the functions required under subsection (c), the Office may—

(A)

receive and collect data and information on and from the insurance industry and insurers;

(B)

enter into information-sharing agreements;

(C)

analyze and disseminate data and information; and

(D)

issue reports regarding all lines of insurance except health insurance.

(2)

Collection of information from insurers and affiliates

(A)

In general

Except as provided in paragraph (3), the Office may require an insurer, or any affiliate of an insurer, to submit such data or information as the Office may reasonably require in carrying out the functions described under subsection (c).

(B)

Rule of construction

Notwithstanding any other provision of this section, for purposes of subparagraph (A), the term 'insurer' means any person that is authorized to write insurance or reinsure risks and issue contracts or policies in 1 or more States.

(3)

Exception for small insurers

Paragraph (2) shall not apply with respect to any insurer or affiliate thereof that meets a minimum size threshold that the Office may establish, whether by order or rule.

(4)

Advance coordination

Before collecting any data or information under paragraph (2) from an insurer, or any affiliate of an insurer, the Office shall coordinate with each relevant State insurance regulator (or other relevant Federal or State regulatory agency, if any, in the case of an affiliate of an insurer) to determine if the information to be collected is available from, or may be obtained in a timely manner by, such State insurance regulator, individually or collectively, another regulatory agency, or publicly available sources. Notwithstanding any other provision of law, each such relevant State insurance regulator or other Federal or State regulatory agency is authorized to provide to the Office such data or information.

(5)

Confidentiality

(A)

Retention of privilege

The submission of any nonpublicly available data and information to the Office under this subsection shall not constitute a waiver of, or otherwise affect, any privilege arising under Federal or State law (including the rules of any Federal or State court) to which the data or information is otherwise subject.

(B)

Continued application of prior confidentiality agreements

Any requirement under Federal or State law to the extent otherwise applicable, or any requirement pursuant to a written agreement in effect between the original source of any nonpublicly available data or information and the source of such data or information to the Office, regarding the privacy or confidentiality of any data or information in the possession of the source to the Office, shall continue to apply to such data or information after the data or information has been provided pursuant to this subsection to the Office.

(C)

Information sharing agreement

Any data or information obtained by the Office may be made available to State insurance regulators, individually or collectively, through an information sharing agreement that—

(i)

shall comply with applicable Federal law; and

(ii)

shall not constitute a waiver of, or otherwise affect, any privilege under Federal or State law (including the rules of any Federal or State Court) to which the data or information is otherwise subject.

(D)

Agency disclosure requirements

Section 552 of title 5, United States Code, shall apply to any data or information submitted to the Office by an insurer or an affiliate of an insurer.

(6)

Subpoenas and enforcement

The Director shall have the power to require by subpoena the production of the data or information requested under paragraph (2), but only upon a written finding by the Director that such data or information is required to carry out the functions described under subsection (c) and that the Office has coordinated with such regulator or agency as required under paragraph (4). Subpoenas shall bear the signature of the Director and shall be served by any person or class of persons designated by the Director for that purpose. In the case of contumacy or failure to obey a subpoena, the subpoena shall be enforceable by order of any appropriate district court of the United States. Any failure to obey the order of the court may be punished by the court as a contempt of court.

(f)

Preemption of State insurance measures

(1)

Standard

A State insurance measure shall be preempted if, and only to the extent that the Director determines, in accordance with this subsection, that the measure—

(A)

results in less favorable treatment of a non-United States insurer domiciled in a foreign jurisdiction that is subject to an international insurance agreement on prudential measures than a United States insurer domiciled, licensed, or otherwise admitted in that State; and

(B)

is inconsistent with an International Insurance Agreement on Prudential Measures.

(2)

Determination

(A)

Notice of potential inconsistency

Before making any determination under paragraph (1), the Director shall—

(i)

notify and consult with the appropriate State regarding any potential inconsistency or preemption;

(ii)

cause to be published in the Federal Register notice of the issue regarding the potential inconsistency or preemption, including a description of each State insurance measure at issue and any applicable International Insurance Agreement on Prudential Measures;

(iii)

provide interested parties a reasonable opportunity to submit written comments to the Office; and

(iv)

consider any comments received.

(B)

Scope of review

For purposes of this subsection, the determination of the Director regarding State insurance measures shall be limited to the subject matter contained within the international insurance agreement on prudential measure involved.

(C)

Notice of determination of inconsistency

Upon making any determination under paragraph (1), the Director shall—

(i)

notify the appropriate State of the determination and the extent of the inconsistency;

(ii)

establish a reasonable period of time, which shall not be less than 30 days, before the determination shall become effective; and

(iii)

notify the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives of the inconsistency.

(3)

Notice of effectiveness

Upon the conclusion of the period referred to in paragraph (2)(C)(ii), if the basis for such determination still exists, the determination shall become effective and the Director shall—

(A)

cause to be published a notice in the Federal Register that the preemption has become effective, as well as the effective date; and

(B)

notify the appropriate State.

(4)

Limitation

No State may enforce a State insurance measure to the extent that such measure has been preempted under this subsection.

(g)

Applicability of Administrative Procedures Act

Determinations of inconsistency made pursuant to subsection (f)(2) shall be subject to the applicable provisions of subchapter II of chapter 5 of title 5, United States Code (relating to administrative procedure), and chapter 7 of such title (relating to judicial review).

(h)

Regulations, policies, and procedures

The Secretary may issue orders, regulations, policies, and procedures to implement this section.

(i)

Consultation

The Director shall consult with State insurance regulators, individually or collectively, to the extent the Director determines appropriate, in carrying out the functions of the Office.

(j)

Savings provisions

Nothing in this section shall—

(1)

preempt—

(A)

any State insurance measure that governs any insurer’s rates, premiums, underwriting, or sales practices;

(B)

any State coverage requirements for insurance;

(C)

the application of the antitrust laws of any State to the business of insurance; or

(D)

any State insurance measure governing the capital or solvency of an insurer, except to the extent that such State insurance measure results in less favorable treatment of a non-United State insurer than a United States insurer;

(2)

be construed to alter, amend, or limit any provision of the Consumer Financial Protection Agency Act of 2010; or

(3)

affect the preemption of any State insurance measure otherwise inconsistent with and preempted by Federal law.

(k)

Retention of existing State regulatory authority

Nothing in this section or section 314 shall be construed to establish or provide the Office or the Department of the Treasury with general supervisory or regulatory authority over the business of insurance.

(l)

Annual report to congress

Beginning September 30, 2011, the Director shall submit a report on or before September 30 of each calendar year to the President and to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the insurance industry, any actions taken by the Office pursuant to subsection (f) (regarding preemption of inconsistent State insurance measures), and any other information as deemed relevant by the Director or as requested by such Committees.

(m)

Study and report on regulation of insurance

(1)

In general

Not later than 18 months after the date of enactment of this section, the Director shall conduct a study and submit a report to Congress on how to modernize and improve the system of insurance regulation in the United States.

(2)

Considerations

The study and report required under paragraph (1) shall be based on and guided by the following considerations:

(A)

Systemic risk regulation with respect to insurance.

(B)

Capital standards and the relationship between capital allocation and liabilities, including standards relating to liquidity and duration risk.

(C)

Consumer protection for insurance products and practices, including gaps in state regulation.

(D)

The degree of national uniformity of state insurance regulation.

(E)

The regulation of insurance companies and affiliates on a consolidated basis.

(F)

International coordination of insurance regulation.

(3)

Additional factors

The study and report required under paragraph (1) shall also examine the following factors:

(A)

The costs and benefits of potential Federal regulation of insurance across various lines of insurance (except health insurance).

(B)

The feasibility of regulating only certain lines of insurance at the Federal level, while leaving other lines of insurance to be regulated at the State level.

(C)

The ability of any potential Federal regulation or Federal regulators to eliminate or minimize regulatory arbitrage.

(D)

The impact that developments in the regulation of insurance in foreign jurisdictions might have on the potential Federal regulation of insurance.

(E)

The ability of any potential Federal regulation or Federal regulator to provide robust consumer protection for policyholders.

(F)

The potential consequences of subjecting insurance companies to a Federal resolution authority, including the effects of any Federal resolution authority—

(i)

on the operation of State insurance guaranty fund systems, including the loss of guaranty fund coverage if an insurance company is subject to a Federal resolution authority;

(ii)

on policyholder protection, including the loss of the priority status of policyholder claims over other unsecured general creditor claims;

(iii)

in the case of life insurance companies, the loss of the special status of separate account assets and separate account liabilities; and

(iv)

on the international competitiveness of insurance companies.

(G)

Such other factors as the Director determines necessary or appropriate, consistent with the principles set forth in paragraph (2).

(4)

Required recommendations

The study and report required under paragraph (1) shall also contain any legislative, administrative, or regulatory recommendations, as the Director determines appropriate, to carry out or effectuate the findings set forth in such report.

(5)

Consultation

With respect to the study and report required under paragraph (1), the Director shall consult with the National Association of Insurance Commissioners, consumer organizations, representatives of the insurance industry and policyholders, and other organizations and experts, as appropriate.

(n)

Use of existing resources

To carry out this section, the Office may employ personnel, facilities, and any other resource of the Department of the Treasury available to the Secretary.

(o)

Definitions

In this section and section 314, the following definitions shall apply:

(1)

Affiliate

The term affiliate means, with respect to an insurer, any person who controls, is controlled by, or is under common control with the insurer.

(2)

Insurer

The term insurer means any person engaged in the business of insurance, including reinsurance.

(3)

International insurance agreement on prudential measures

The term International Insurance Agreement on Prudential Measures means a written bilateral or multilateral agreement entered into between the United States and a foreign government, authority, or regulatory entity regarding prudential measures applicable to the business of insurance or reinsurance.

(4)

Non-United States insurer

The term non-United States insurer means an insurer that is organized under the laws of a jurisdiction other than a State, but does not include any United States branch of such an insurer.

(5)

Office

The term Office means the Office of National Insurance established by this section.

(6)

State insurance measure

The term State insurance measure means any State law, regulation, administrative ruling, bulletin, guideline, or practice relating to or affecting prudential measures applicable to insurance or reinsurance.

(7)

State insurance regulator

The term State insurance regulator means any State regulatory authority responsible for the supervision of insurers.

(8)

United States insurer

The term United States insurer means—

(A)

an insurer that is organized under the laws of a State; or

(B)

a United States branch of a non-United States insurer.

(p)

Authorization of appropriations

There are authorized to be appropriated for the Office for each fiscal year such sums as may be necessary.

314.

International insurance agreements on prudential measures

(a)

In general

The Secretary of the Treasury is authorized to negotiate and enter into International Insurance Agreements on Prudential Measures on behalf of the United States.

(b)

Savings provision

Nothing in this section or section 313 shall be construed to affect the development and coordination of United States international trade policy or the administration of the United States trade agreements program. It is to be understood that the negotiation of International Insurance Agreements on Prudential Measures under such sections is consistent with the requirement of this subsection.

(c)

Consultation

The Secretary shall consult with the United States Trade Representative on the negotiation of International Insurance Agreements on Prudential Measures, including prior to initiating and concluding any such agreements.

.

(b)

Duties of Secretary

Section 321(a) of title 31, United States Code, is amended—

(1)

in paragraph (7), by striking ; and and inserting a semicolon;

(2)

in paragraph (8)(C), by striking the period at the end and inserting ; and; and

(3)

by adding at the end the following new paragraph:

(9)

advise the President on major domestic and international prudential policy issues in connection with all lines of insurance except health insurance.

.

(c)

Clerical amendment

The table of sections for subchapter I of chapter 3 of title 31, United States Code, is amended by striking the item relating to section 312 and inserting the following new items:

Sec. 312. Terrorism and financial intelligence.

Sec. 313. Office of National Insurance.

Sec. 314. International insurance agreements on prudential measures.

Sec. 315. Continuing in office.

.

B

State-based Insurance Reform

511.

Short title

This subtitle may be cited as the Nonadmitted and Reinsurance Reform Act of 2010.

512.

Effective date

Except as otherwise specifically provided in this subtitle, this subtitle shall take effect upon the expiration of the 12-month period beginning on the date of the enactment of this subtitle.

I

Nonadmitted insurance

521.

Reporting, payment, and allocation of premium taxes

(a)

Home State’s exclusive authority

No State other than the home State of an insured may require any premium tax payment for nonadmitted insurance.

(b)

Allocation of nonadmitted premium taxes

(1)

In general

The States may enter into a compact or otherwise establish procedures to allocate among the States the premium taxes paid to an insured’s home State described in subsection (a).

(2)

Effective date

Except as expressly otherwise provided in such compact or other procedures, any such compact or other procedures—

(A)

if adopted on or before the expiration of the 330-day period that begins on the date of the enactment of this subtitle, shall apply to any premium taxes that, on or after such date of enactment, are required to be paid to any State that is subject to such compact or procedures; and

(B)

if adopted after the expiration of such 330-day period, shall apply to any premium taxes that, on or after January 1 of the first calendar year that begins after the expiration of such 330-day period, are required to be paid to any State that is subject to such compact or procedures.

(3)

Report

Upon the expiration of the 330-day period referred to in paragraph (2), the NAIC may submit a report to the Committee on Financial Services and Committee on the Judiciary of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate identifying and describing any compact or other procedures for allocation among the States of premium taxes that have been adopted during such period by any States.

(4)

Nationwide system

The Congress intends that each State adopt nationwide uniform requirements, forms, and procedures, such as an interstate compact, that provides for the reporting, payment, collection, and allocation of premium taxes for nonadmitted insurance consistent with this section.

(c)

Allocation based on tax allocation report

To facilitate the payment of premium taxes among the States, an insured’s home State may require surplus lines brokers and insureds who have independently procured insurance to annually file tax allocation reports with the insured’s home State detailing the portion of the nonadmitted insurance policy premium or premiums attributable to properties, risks, or exposures located in each State. The filing of a nonadmitted insurance tax allocation report and the payment of tax may be made by a person authorized by the insured to act as its agent.

522.

Regulation of nonadmitted insurance by insured’s home State

(a)

Home State authority

Except as otherwise provided in this section, the placement of nonadmitted insurance shall be subject to the statutory and regulatory requirements solely of the insured’s home State.

(b)

Broker licensing

No State other than an insured’s home State may require a surplus lines broker to be licensed in order to sell, solicit, or negotiate nonadmitted insurance with respect to such insured.

(c)

Enforcement provision

With respect to section 521 and subsections (a) and (b) of this section, any law, regulation, provision, or action of any State that applies or purports to apply to nonadmitted insurance sold to, solicited by, or negotiated with an insured whose home State is another State shall be preempted with respect to such application.

(d)

Workers’ compensation exception

This section may not be construed to preempt any State law, rule, or regulation that restricts the placement of workers’ compensation insurance or excess insurance for self-funded workers’ compensation plans with a nonadmitted insurer.

523.

Participation in national producer database

After the expiration of the 2-year period beginning on the date of the enactment of this subtitle, a State may not collect any fees relating to licensing of an individual or entity as a surplus lines broker in the State unless the State has in effect at such time laws or regulations that provide for participation by the State in the national insurance producer database of the NAIC, or any other equivalent uniform national database, for the licensure of surplus lines brokers and the renewal of such licenses.

524.

Uniform standards for surplus lines eligibility

A State may not—

(1)

impose eligibility requirements on, or otherwise establish eligibility criteria for, nonadmitted insurers domiciled in a United States jurisdiction, except in conformance with such requirements and criteria in sections 5A(2) and 5C(2)(a) of the Non-Admitted Insurance Model Act, unless the State has adopted nationwide uniform requirements, forms, and procedures developed in accordance with section 521(b) of this subtitle that include alternative nationwide uniform eligibility requirements; or

(2)

prohibit a surplus lines broker from placing nonadmitted insurance with, or procuring nonadmitted insurance from, a nonadmitted insurer domiciled outside the United States that is listed on the Quarterly Listing of Alien Insurers maintained by the International Insurers Department of the NAIC.

525.

Streamlined application for commercial purchasers

A surplus lines broker seeking to procure or place nonadmitted insurance in a State for an exempt commercial purchaser shall not be required to satisfy any State requirement to make a due diligence search to determine whether the full amount or type of insurance sought by such exempt commercial purchaser can be obtained from admitted insurers if—

(1)

the broker procuring or placing the surplus lines insurance has disclosed to the exempt commercial purchaser that such insurance may or may not be available from the admitted market that may provide greater protection with more regulatory oversight; and

(2)

the exempt commercial purchaser has subsequently requested in writing the broker to procure or place such insurance from a nonadmitted insurer.

526.

GAO study of nonadmitted insurance market

(a)

In general

The Comptroller General of the United States shall conduct a study of the nonadmitted insurance market to determine the effect of the enactment of this part on the size and market share of the nonadmitted insurance market for providing coverage typically provided by the admitted insurance market.

(b)

Contents

The study shall determine and analyze—

(1)

the change in the size and market share of the nonadmitted insurance market and in the number of insurance companies and insurance holding companies providing such business in the 18-month period that begins upon the effective date of this subtitle;

(2)

the extent to which insurance coverage typically provided by the admitted insurance market has shifted to the nonadmitted insurance market;

(3)

the consequences of any change in the size and market share of the nonadmitted insurance market, including differences in the price and availability of coverage available in both the admitted and nonadmitted insurance markets;

(4)

the extent to which insurance companies and insurance holding companies that provide both admitted and nonadmitted insurance have experienced shifts in the volume of business between admitted and nonadmitted insurance; and

(5)

the extent to which there has been a change in the number of individuals who have nonadmitted insurance policies, the type of coverage provided under such policies, and whether such coverage is available in the admitted insurance market.

(c)

Consultation with NAIC

In conducting the study under this section, the Comptroller General shall consult with the NAIC.

(d)

Report

The Comptroller General shall complete the study under this section and submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives regarding the findings of the study not later than 30 months after the effective date of this subtitle.

527.

Definitions

For purposes of this part, the following definitions shall apply:

(1)

Admitted insurer

The term admitted insurer means, with respect to a State, an insurer licensed to engage in the business of insurance in such State.

(2)

Affiliate

The term affiliate means, with respect to an insured, any entity that controls, is controlled by, or is under common control with the insured.

(3)

Affiliated group

The term affiliated group means any group of entities that are all affiliated.

(4)

Control

An entity has control over another entity if—

(A)

the entity directly or indirectly or acting through 1 or more other persons owns, controls, or has the power to vote 25 percent or more of any class of voting securities of the other entity; or

(B)

the entity controls in any manner the election of a majority of the directors or trustees of the other entity.

(5)

Exempt commercial purchaser

The term exempt commercial purchaser means any person purchasing commercial insurance that, at the time of placement, meets the following requirements:

(A)

The person employs or retains a qualified risk manager to negotiate insurance coverage.

(B)

The person has paid aggregate nationwide commercial property and casualty insurance premiums in excess of $100,000 in the immediately preceding 12 months.

(C)
(i)

The person meets at least 1 of the following criteria:

(I)

The person possesses a net worth in excess of $20,000,000, as such amount is adjusted pursuant to clause (ii).

(II)

The person generates annual revenues in excess of $50,000,000, as such amount is adjusted pursuant to clause (ii).

(III)

The person employs more than 500 full-time or full-time equivalent employees per individual insured or is a member of an affiliated group employing more than 1,000 employees in the aggregate.

(IV)

The person is a not-for-profit organization or public entity generating annual budgeted expenditures of at least $30,000,000, as such amount is adjusted pursuant to clause (ii).

(V)

The person is a municipality with a population in excess of 50,000 persons.

(ii)

Effective on the fifth January 1 occurring after the date of the enactment of this subtitle and each fifth January 1 occurring thereafter, the amounts in subclauses (I), (II), and (IV) of clause (i) shall be adjusted to reflect the percentage change for such 5-year period in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor.

(6)

Home State

(A)

In general

Except as provided in subparagraph (B), the term home State means, with respect to an insured—

(i)

the State in which an insured maintains its principal place of business or, in the case of an individual, the individual’s principal residence; or

(ii)

if 100 percent of the insured risk is located out of the State referred to in subparagraph (A), the State to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated.

(B)

Affiliated groups

If more than 1 insured from an affiliated group are named insureds on a single nonadmitted insurance contract, the term home State means the home State, as determined pursuant to subparagraph (A), of the member of the affiliated group that has the largest percentage of premium attributed to it under such insurance contract.

(7)

Independently procured insurance

The term independently procured insurance means insurance procured directly by an insured from a nonadmitted insurer.

(8)

NAIC

The term NAIC means the National Association of Insurance Commissioners or any successor entity.

(9)

Nonadmitted insurance

The term nonadmitted insurance means any property and casualty insurance permitted to be placed directly or through a surplus lines broker with a nonadmitted insurer eligible to accept such insurance.

(10)

Non-admitted insurance model act

The term Non-Admitted Insurance Model Act means the provisions of the Non-Admitted Insurance Model Act, as adopted by the NAIC on August 3, 1994, and amended on September 30, 1996, December 6, 1997, October 2, 1999, and June 8, 2002.

(11)

Nonadmitted insurer

The term nonadmitted insurer

(A)

means, with respect to a State, an insurer not licensed to engage in the business of insurance in such State; but

(B)

does not include a risk retention group, as that term is defined in section 2(a)(4) of the Liability Risk Retention Act of 1986 (15 U.S.C. 3901(a)(4)).

(12)

Qualified risk manager

The term qualified risk manager means, with respect to a policyholder of commercial insurance, a person who meets all of the following requirements:

(A)

The person is an employee of, or third party consultant retained by, the commercial policyholder.

(B)

The person provides skilled services in loss prevention, loss reduction, or risk and insurance coverage analysis, and purchase of insurance.

(C)

The person—

(i)
(I)

has a bachelor’s degree or higher from an accredited college or university in risk management, business administration, finance, economics, or any other field determined by a State insurance commissioner or other State regulatory official or entity to demonstrate minimum competence in risk management; and

(II)
(aa)

has 3 years of experience in risk financing, claims administration, loss prevention, risk and insurance analysis, or purchasing commercial lines of insurance; or

(bb)

has 1 of the following designations:

(AA)

a designation as a Chartered Property and Casualty Underwriter (in this subparagraph referred to as CPCU) issued by the American Institute for CPCU/Insurance Institute of America;

(BB)

a designation as an Associate in Risk Management (ARM) issued by the American Institute for CPCU/Insurance Institute of America;

(CC)

a designation as Certified Risk Manager (CRM) issued by the National Alliance for Insurance Education & Research;

(DD)

a designation as a RIMS Fellow (RF) issued by the Global Risk Management Institute; or

(EE)

any other designation, certification, or license determined by a State insurance commissioner or other State insurance regulatory official or entity to demonstrate minimum competency in risk management;

(ii)
(I)

has at least 7 years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance; and

(II)

has any 1 of the designations specified in subitems (AA) through (EE) of clause (i)(II)(bb);

(iii)

has at least 10 years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance; or

(iv)

has a graduate degree from an accredited college or university in risk management, business administration, finance, economics, or any other field determined by a State insurance commissioner or other State regulatory official or entity to demonstrate minimum competence in risk management.

(13)

Premium tax

The term premium tax means, with respect to surplus lines or independently procured insurance coverage, any tax, fee, assessment, or other charge imposed by a government entity directly or indirectly based on any payment made as consideration for an insurance contract for such insurance, including premium deposits, assessments, registration fees, and any other compensation given in consideration for a contract of insurance.

(14)

Surplus lines broker

The term surplus lines broker means an individual, firm, or corporation which is licensed in a State to sell, solicit, or negotiate insurance on properties, risks, or exposures located or to be performed in a State with nonadmitted insurers.

II

Reinsurance

531.

Regulation of credit for reinsurance and reinsurance agreements

(a)

Credit for reinsurance

If the State of domicile of a ceding insurer is an NAIC-accredited State, or has financial solvency requirements substantially similar to the requirements necessary for NAIC accreditation, and recognizes credit for reinsurance for the insurer’s ceded risk, then no other State may deny such credit for reinsurance.

(b)

Additional preemption of extraterritorial application of State law

In addition to the application of subsection (a), all laws, regulations, provisions, or other actions of a State that is not the domiciliary State of the ceding insurer, except those with respect to taxes and assessments on insurance companies or insurance income, are preempted to the extent that they—

(1)

restrict or eliminate the rights of the ceding insurer or the assuming insurer to resolve disputes pursuant to contractual arbitration to the extent such contractual provision is not inconsistent with the provisions of title 9, United States Code;

(2)

require that a certain State’s law shall govern the reinsurance contract, disputes arising from the reinsurance contract, or requirements of the reinsurance contract;

(3)

attempt to enforce a reinsurance contract on terms different than those set forth in the reinsurance contract, to the extent that the terms are not inconsistent with this part; or

(4)

otherwise apply the laws of the State to reinsurance agreements of ceding insurers not domiciled in that State.

532.

Regulation of reinsurer solvency

(a)

Domiciliary state regulation

If the State of domicile of a reinsurer is an NAIC-accredited State or has financial solvency requirements substantially similar to the requirements necessary for NAIC accreditation, such State shall be solely responsible for regulating the financial solvency of the reinsurer.

(b)

Nondomiciliary states

(1)

Limitation on financial information requirements

If the State of domicile of a reinsurer is an NAIC-accredited State or has financial solvency requirements substantially similar to the requirements necessary for NAIC accreditation, no other State may require the reinsurer to provide any additional financial information other than the information the reinsurer is required to file with its domiciliary State.

(2)

Receipt of information

No provision of this section shall be construed as preventing or prohibiting a State that is not the State of domicile of a reinsurer from receiving a copy of any financial statement filed with its domiciliary State.

533.

Definitions

For purposes of this part, the following definitions shall apply:

(1)

Ceding insurer

The term ceding insurer means an insurer that purchases reinsurance.

(2)

Domiciliary State

The terms State of domicile and domiciliary State mean, with respect to an insurer or reinsurer, the State in which the insurer or reinsurer is incorporated or entered through, and licensed.

(3)

Reinsurance

The term reinsurance means the assumption by an insurer of all or part of a risk undertaken originally by another insurer.

(4)

Reinsurer

(A)

In general

The term reinsurer means an insurer to the extent that the insurer—

(i)

is principally engaged in the business of reinsurance;

(ii)

does not conduct significant amounts of direct insurance as a percentage of its net premiums; and

(iii)

is not engaged in an ongoing basis in the business of soliciting direct insurance.

(B)

Determination

A determination of whether an insurer is a reinsurer shall be made under the laws of the State of domicile in accordance with this paragraph.

III

Rule of construction

541.

Rule of construction

Nothing in this subtitle or the amendments made by this subtitle shall be construed to modify, impair, or supersede the application of the antitrust laws. Any implied or actual conflict between this subtitle and any amendments to this subtitle and the antitrust laws shall be resolved in favor of the operation of the antitrust laws.

542.

Severability

If any section or subsection of this subtitle, or any application of such provision to any person or circumstance, is held to be unconstitutional, the remainder of this subtitle, and the application of the provision to any other person or circumstance, shall not be affected.

VI

Improvements to regulation of bank and savings association holding companies and depository institutions

601.

Short title

This title may be cited as the Bank and Savings Association Holding Company and Depository Institution Regulatory Improvements Act of 2010.

602.

Definition

In this title, the term commercial firm means any entity that derives not less than 15 percent of the consolidated annual gross revenues of the entity, including all affiliates of the entity, from engaging in activities that are not financial in nature or incidental to activities that are financial in nature, as provided in section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)).

603.

Moratorium and study on treatment of credit card banks, industrial loan companies, and certain other companies under the Bank Holding Company Act of 1956

(a)

Moratorium

(1)

Definitions

In this subsection—

(A)

the term credit card bank means an institution described in section 2(c)(2)(F) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(F));

(B)

the term industrial bank means an institution described in section 2(c)(2)(H) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(H)); and

(C)

the term trust bank means an institution described in section 2(c)(2)(D) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(D)).

(2)

Moratorium on provision of deposit insurance

The Corporation may not approve an application for deposit insurance under section 5 of the Federal Deposit Insurance Act (12 U.S.C. 1815) that is received after November 10, 2009, for an industrial bank, a credit card bank, or a trust bank that is directly or indirectly owned or controlled by a commercial firm.

(3)

Change in control

(A)

In general

Except as provided in subparagraph (B), the appropriate Federal banking agency shall disapprove a change in control, as provided in section 7(j) of the Federal Deposit Insurance Act (12 U.S.C. 1817(j)), of an industrial bank, a credit card bank, or a trust bank if the change in control would result in direct or indirect control of the industrial bank, credit card bank, or trust bank by a commercial firm.

(B)

Exceptions

Subparagraph (A) shall not apply to a change in control of an industrial bank, credit card bank, or trust bank that—

(i)

is in danger of default, as determined by the appropriate Federal banking agency; or

(ii)

results from the merger or whole acquisition of a commercial firm that directly or indirectly controls the industrial bank, credit card bank, or trust bank in a bona fide merger with or acquisition by another commercial firm, as determined by the appropriate Federal banking agency.

(4)

Sunset

This subsection shall cease to have effect 3 years after the date of enactment of this Act.

(b)

Government Accountability Office study of exceptions under the Bank Holding Company Act of 1956

(1)

Study required

The Comptroller General of the United States shall carry out a study to determine whether it is necessary, in order to strengthen the safety and soundness of institutions or the stability of the financial system, to eliminate the exceptions under section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841) for institutions described in—

(A)

section 2(a)(5)(E) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)(5)(E));

(B)

section 2(a)(5)(F) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)(5)(F));

(C)

section 2(c)(2)(D) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(D));

(D)

section 2(c)(2)(F) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(F));

(E)

section 2(c)(2)(H) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(H)); and

(F)

section 2(c)(2)(B) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(B)).

(2)

Content of study

(A)

In general

The study required under paragraph (1), with respect to the institutions referenced in each of subparagraphs (A) through (E) of paragraph (1), shall, to the extent feasible be based on information provided to the Comptroller General by the appropriate Federal or State regulator, and shall—

(i)

identify the types and number of institutions excepted from section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841) under each of the subparagraphs described in subparagraphs (A) through (E) of paragraph (1);

(ii)

generally describe the size and geographic locations of the institutions described in clause (i);

(iii)

determine the extent to which the institutions described in clause (i) are held by holding companies that are commercial firms;

(iv)

determine whether the institutions described in clause (i) have any affiliates that are commercial firms;

(v)

identify the Federal banking agency responsible for the supervision of the institutions described in clause (i) on and after the transfer date;

(vi)

determine the adequacy of the Federal bank regulatory framework applicable to each category of institution described in clause (i), including any restrictions (including limitations on affiliate transactions or cross-marketing) that apply to transactions between an institution, the holding company of the institution, and any other affiliate of the institution; and

(vii)

evaluate the potential consequences of subjecting the institutions described in clause (i) to the requirements of the Bank Holding Company Act of 1956, including with respect to the availability and allocation of credit, the stability of the financial system and the economy, the safe and sound operation of each category of institution, and the impact on the types of activities in which such institutions, and the holding companies of such institutions, may engage.

(B)

Savings associations

With respect to institutions described in paragraph (1)(F), the study required under paragraph (1) shall—

(i)

determine the adequacy of the Federal bank regulatory framework applicable to such institutions, including any restrictions (including limitations on affiliate transactions or cross-marketing) that apply to transactions between an institution, the holding company of the institution, and any other affiliate of the institution; and

(ii)

evaluate the potential consequences of subjecting the institutions described in paragraph (1)(F) to the requirements of the Bank Holding Company Act of 1956, including with respect to the availability and allocation of credit, the stability of the financial system and the economy, the safe and sound operation of such institutions, and the impact on the types of activities in which such institutions, and the holding companies of such institutions, may engage.

(3)

Report

Not later than 18 months after the date of enactment of this Act, the Comptroller General shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report on the study required under paragraph (1).

604.

Reports and examinations of holding companies; regulation of functionally regulated subsidiaries

(a)

Reports by bank holding companies

Sections 5(c)(1) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(1)) is amended—

(1)

by striking subparagraph (B) and inserting the following:

(B)

Use of existing reports and other supervisory information

The appropriate Federal banking agency for a bank holding company shall, to the fullest extent possible, use—

(i)

reports and other supervisory information that the bank holding company or any subsidiary thereof has been required to provide to other Federal or State regulatory agencies;

(ii)

externally audited financial statements of the bank holding company or subsidiary;

(iii)

information otherwise available from Federal or State regulatory agencies; and

(iv)

information that is otherwise required to be reported publicly.

; and

(2)

by adding at the end the following:

(C)

Availability

Upon the request of the appropriate Federal banking agency for a bank holding company, the bank holding company or a subsidiary of the bank holding company shall promptly provide to the appropriate Federal banking agency any information described in clauses (i) through (iii) of subparagraph (B).

.

(b)

Examinations of bank holding companies

Section 5(c)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(2)) is amended to read as follows:

(2)

Examinations

(A)

In general

The appropriate Federal banking agency for a bank holding company may make examinations of the bank holding company and each subsidiary of the bank holding company in order to—

(i)

inform such appropriate Federal banking agency of—

(I)

the nature of the operations and financial condition of the bank holding company and the subsidiary;

(II)

the financial, operational, and other risks within the bank holding company system that may pose a threat to—

(aa)

the safety and soundness of the bank holding company or of any depository institution subsidiary of the bank holding company; or

(bb)

the stability of the financial system of the United States; and

(III)

the systems of the bank holding company for monitoring and controlling the risks described in subclause (II); and

(ii)

enforce the compliance of the bank holding company and the subsidiary with this Act and any other Federal law that such appropriate Federal banking agency has specific jurisdiction to enforce against the bank holding company or subsidiary.

(B)

Use of reports to reduce examinations

For purposes of this paragraph, the appropriate Federal banking agency for a bank holding company shall, to the fullest extent possible, rely on—

(i)

examination reports made by other Federal or State regulatory agencies relating to the bank holding company and any subsidiary of the bank holding company; and

(ii)

the reports and other information required under paragraph (1).

(C)

Coordination with other regulators

The appropriate Federal banking agency for a bank holding company shall—

(i)

provide reasonable notice to, and consult with, the appropriate Federal banking agency or State regulatory agency of a subsidiary that is a depository institution or a functionally regulated subsidiary before commencing an examination of the subsidiary under this section; and

(ii)

to the fullest extent possible, avoid duplication of examination activities, reporting requirements, and requests for information.

.

(c)

Authority to regulate functionally regulated subsidiaries of bank holding companies

The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is amended—

(1)

in section 5(c) (12 U.S.C. 1844(c)), by striking paragraphs (3) and (4) and inserting the following:

(3)

[Reserved]

(4)

[Reserved]

; and

(2)

by striking section 10A (12 U.S.C. 1848a).

(d)

Acquisitions of banks

Section 3(c) of the Bank Holding Company Act of 1956 (12 U.S.C. 1842(c)) is amended by adding at the end the following:

(7)

Financial stability

In every case, the appropriate Federal banking agency of a bank holding company shall take into consideration the extent to which a proposed acquisition, merger, or consolidation would result in greater or more concentrated risks to the stability of the United States banking or financial system.

.

(e)

Acquisitions of nonbanks

(1)

Notice procedures

Section 4(j)(2)(A) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(j)(2)(A)) is amended by striking or unsound banking practices and inserting unsound banking practices, or risk to the stability of the United States banking or financial system.

(2)

Activities that are financial in nature

Section 4(k)(6)(B) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)(6)(B)) is amended to read as follows:

(B)

Approval not required for certain financial activities

(i)

In general

Except as provided in clause (ii), a financial holding company may commence any activity or acquire any company, pursuant to paragraph (4) or any regulation prescribed or order issued under paragraph (5), without prior approval of the appropriate Federal banking agency for the financial holding company.

(ii)

Exception

A financial holding company may not acquire a company, without the prior approval of the appropriate Federal banking agency for the financial holding company, in a transaction in which the total consolidated assets to be acquired by the financial holding company exceed $25,000,000,000.

.

(f)

Bank merger act transactions

Section 18(c)(5) of the Federal Deposit Insurance Act (12 U.S.C. 1828(c)(5)) is amended, in the matter immediately following subparagraph (B), by striking and the convenience and needs of the community to be served and inserting the convenience and needs of the community to be served, and the risk to the stability of the United States banking or financial system.

(g)

Reports by savings and loan holding companies

Section 10(b)(2) of the Home Owners' Loan Act (12 U.S.C. 1467a(b)(2) is amended—

(1)

by striking Each savings and inserting the following:

(A)

In general

Each savings

; and

(2)

by adding at the end the following:

(B)

Use of existing reports and other supervisory information

The appropriate Federal banking agency for a savings and loan holding company shall, to the fullest extent possible, use—

(i)

reports and other supervisory information that the savings and loan holding company or any subsidiary thereof has been required to provide to other Federal or State regulatory agencies;

(ii)

externally audited financial statements of the savings and loan holding company or subsidiary;

(iii)

information that is otherwise available from Federal or State regulatory agencies; and

(iv)

information that is otherwise required to be reported publicly.

(C)

Availability

Upon the request of the appropriate Federal banking agency for a savings and loan holding company, the savings and loan holding company or a subsidiary of the savings and loan holding company shall promptly provide to the appropriate Federal banking agency any information described in clauses (i) through (iii) of subparagraph (B).

.

(h)

Examination of savings and loan holding companies

(1)

Definitions

Section 2 of the Home Owners' Loan Act (12 U.S.C. 1462) is amended by adding at the end the following:

(10)

Appropriate Federal banking agency

The term appropriate Federal banking agency has the same meaning as in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)).

(11)

Functionally regulated subsidiary

The term functionally regulated subsidiary has the same meaning as in section 5(c)(5) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(5)).

.

(2)

Examination

Section 10(b) of the Home Owners' Loan Act (12 U.S.C. 1467a(b)) is amended by striking paragraph (4) and inserting the following:

(4)

Examinations

(A)

In general

The appropriate Federal banking agency for a savings and loan holding company may make examinations of the savings and loan holding company and each subsidiary of the savings and loan holding company system, in order to—

(i)

inform such appropriate Federal banking agency of—

(I)

the nature of the operations and financial condition of the savings and loan holding company and the subsidiary;

(II)

the financial, operational, and other risks within the savings and loan holding company that may pose a threat to—

(aa)

the safety and soundness of the savings and loan holding company or of any depository institution subsidiary of the savings and loan holding company; or

(bb)

the stability of the financial system of the United States; and

(III)

the systems of the savings and loan holding company for monitoring and controlling the risks described in subclause (II); and

(ii)

enforce the compliance of the savings and loan holding company and the subsidiary with this Act and any other Federal law that such appropriate Federal banking agency has specific jurisdiction to enforce against the savings and loan holding company or subsidiary.

(B)

Use of reports to reduce examinations

For purposes of this subsection, the appropriate Federal banking agency for a savings and loan holding company shall, to the fullest extent possible, rely on—

(i)

the examination reports made by other Federal or State regulatory agencies relating to the savings and loan holding company and any subsidiary; and

(ii)

the reports and other information required under paragraph (2).

(C)

Coordination with other regulators

The appropriate Federal banking agency for a savings and loan holding company shall—

(i)

provide reasonable notice to, and consult with, the appropriate Federal banking agency or State regulatory agency of a subsidiary that is a depository institution or a functionally regulated subsidiary before commencing an examination of the subsidiary under this section; and

(ii)

to the fullest extent possible, avoid duplication of examination activities, reporting requirements, and requests for information.

.

(i)

Effective date

The amendments made by this section shall take effect on the transfer date.

605.

Assuring consistent oversight of permissible activities of depository institution subsidiaries of holding companies

Section 6 of the Bank Holding Company Act of 1956 (12 U.S.C. 1845) is amended to read as follows:

6.

Assuring consistent oversight of permissible activities of depository institution subsidiaries of holding companies

(a)

Definitions

(1)

Definitions

In this section—

(A)

the term depository institution holding company has the same meaning as in section 3(w) of the Federal Deposit Insurance Act (12 U.S.C. 1813(w));

(B)

the term functionally regulated subsidiary has the same meaning as in section 5(c)(5); and

(C)

the term lead Federal banking agency means—

(i)

the Office of the Comptroller of the Currency, in the case of any depository institution holding company having—

(I)

a subsidiary that is an insured depository institution, if all such insured depository institutions are Federal depository institutions; or

(II)

a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are Federal depository institutions exceed the total consolidated assets of all subsidiaries that are State depository institutions; and

(ii)

the Federal Deposit Insurance Corporation, in the case of any depository institution holding company having—

(I)

a subsidiary that is an insured depository institution, if all such insured depository institutions are State depository institutions; or

(II)

a subsidiary that is a Federal depository institution and a subsidiary that is a State depository institution, if the total consolidated assets of all subsidiaries that are State depository institutions exceed the total consolidated assets of all subsidiaries that are Federal depository institutions.

(2)

Determination of total consolidated assets

For purposes of paragraph (1)(A), the total consolidated assets of a depository institution shall be determined in the same manner that total consolidated assets of depository institutions are determined for purposes of section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)).

(b)

Lead agency supervision

(1)

In general

The lead Federal banking agency for each depository institution holding company shall make examinations of the activities of each nondepository institution subsidiary (other than a functionally regulated subsidiary) of the depository institution holding company that are permissible for depository institution subsidiaries of the depository institution holding company, to determine whether the activities—

(A)

present safety and soundness risks to any depository institution subsidiary of the depository institution holding company;

(B)

are conducted in accordance with applicable law; and

(C)

are subject to appropriate systems for monitoring and controlling the financial, operating, and other risks of the activity and protecting the depository institution subsidiaries of the holding company.

(2)

Process for examination

An examination under paragraph (1) shall be carried out under the authority of the lead Federal banking agency, as if the nondepository institution subsidiary were an insured depository institution for which the lead Federal banking agency is the appropriate Federal banking agency.

(c)

Coordination

For each depository institution holding company for which the Board of Governors is the appropriate Federal banking agency, the lead Federal banking agency of the depository institution holding company shall coordinate the supervision of the activities of subsidiaries described in subsection (b) with the Board of Governors, in a manner that—

(1)

avoids duplication;

(2)

shares information relevant to the supervision of the depository institution holding company by each agency;

(3)

achieves the objectives of subsection (b); and

(4)

ensures that the depository institution holding company and the subsidiaries of the depository institution holding company are not subject to conflicting supervisory demands by the 2 agencies.

(d)

Referrals for enforcement

(1)

Recommendation of action by Board of Governors

The lead Federal banking agency for a depository institution holding company, based on information obtained pursuant to the responsibilities of the agency under subsection (b), may submit to the Board of Governors, in writing, a recommendation that the Board of Governors take enforcement action against a nondepository institution subsidiary (other than a functionally regulated subsidiary) of the depository institution holding company, together with an explanation of the concerns giving rise to the recommendation.

(2)

Back-up authority of the lead Federal banking agency

If, within the 60-day period beginning on the date on which the Board of Governors receives a recommendation under paragraph (1), the Board of Governors does not take enforcement action against a nondepository institution subsidiary or provide a plan for enforcement action that is acceptable to the lead Federal banking agency, the lead Federal banking agency (upon the authorization of the Comptroller, or the Federal Deposit Insurance Corporation, upon a vote of its members, as applicable) may take the recommended enforcement action, in the same manner as if the subsidiary were an insured depository institution for which the lead Federal banking agency is the appropriate Federal banking agency.

.

606.

Requirements for financial holding companies to remain well capitalized and well managed

(a)

Amendment

Section 4(l)(1) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(l)(1)) is amended—

(1)

in subparagraph (B), by striking and at the end;

(2)

by redesignating subparagraph (C) as subparagraph (D);

(3)

by inserting after subparagraph (B) the following:

(C)

the bank holding company is well capitalized and well managed; and

; and

(4)

in subparagraph (D)(ii), as so redesignated, by striking subparagraphs (A) and (B) and inserting subparagraphs (A), (B), and (C).

(b)

Effective date

The amendments made by this section shall take effect on the transfer date.

607.

Standards for interstate acquisitions

(a)

Acquisition of banks

Section 3(d)(1)(A) of the Bank Holding Company Act of 1956 (12 U.S.C. 1842(d)(1)(A)) is amended by striking adequately capitalized and adequately managed and inserting well capitalized and well managed.

(b)

Interstate bank mergers

Section 44(b)(4)(B) of the Federal Deposit Insurance Act (12 U.S.C. 1831u(b)(4)(B)) is amended by striking will continue to be adequately capitalized and adequately managed and inserting will be well capitalized and well managed.

(c)

Effective date

The amendments made by this section shall take effect on the transfer date.

608.

Enhancing existing restrictions on bank transactions with affiliates

(a)

Affiliate transactions

Section 23A of the Federal Reserve Act (12 U.S.C. 371c) is amended—

(1)

in subsection (b)—

(A)

in paragraph (1), by striking subparagraph (D) and inserting the following:

(D)

any investment fund with respect to which a member bank or affiliate thereof is an investment adviser; and

; and

(B)

in paragraph (7)—

(i)

in subparagraph (A), by inserting before the semicolon at the end the following: , including a purchase of assets subject to an agreement to repurchase;

(ii)

in subparagraph (C), by striking , including assets subject to an agreement to repurchase,;

(iii)

in subparagraph (D)—

(I)

by inserting or other debt obligations after acceptance of securities; and

(II)

by striking or at the end; and

(iv)

by adding at the end the following:

(F)

a transaction with an affiliate that involves the borrowing or lending of securities, to the extent that the transaction causes a member bank or a subsidiary to have credit exposure to the affiliate; or

(G)

a derivative transaction, as defined in paragraph (3) of section 5200(b) of the Revised Statutes of the United States (12 U.S.C. 84(b)), with an affiliate, to the extent that the transaction causes a member bank or a subsidiary to have credit exposure to the affiliate;

;

(2)

in subsection (c)—

(A)

in paragraph (1)—

(i)

in the matter preceding subparagraph (A), by striking subsidiary and all that follows through time of the transaction and inserting subsidiary, and any credit exposure of a member bank or a subsidiary to an affiliate resulting from a securities borrowing or lending transaction, or a derivative transaction, shall be secured at all times; and

(ii)

in each of subparagraphs (A) through (D), by striking or letter of credit and inserting letter of credit, or credit exposure;

(B)

by striking paragraph (2);

(C)

by redesignating paragraphs (3) through (5) as paragraphs (2) through (4), respectively;

(D)

in paragraph (2), as so redesignated, by inserting before the period at the end , or credit exposure to an affiliate resulting from a securities borrowing or lending transaction, or derivative transaction; and

(E)

in paragraph (3), as so redesignated—

(i)

by inserting or other debt obligations after securities; and

(ii)

by striking or guarantee and all that follows through behalf of, and inserting guarantee, acceptance, or letter of credit issued on behalf of, or credit exposure from a securities borrowing or lending transaction, or derivative transaction to,;

(3)

in subsection (d)(4), in the matter preceding subparagraph (A), by striking or issuing and all that follows through behalf of, and inserting issuing a guarantee, acceptance, or letter of credit on behalf of, or having credit exposure resulting from a securities borrowing or lending transaction, or derivative transaction to,; and

(4)

in subsection (f)—

(A)

in paragraph (2)—

(i)

by striking or order;

(ii)

by striking if it finds and all that follows through the end of the paragraph and inserting the following: “if—

(i)

the Board finds the exemption to be in the public interest and consistent with the purposes of this section, and notifies the Federal Deposit Insurance Corporation of such finding; and

(ii)

before the end of the 60-day period beginning on the date on which the Federal Deposit Insurance Corporation receives notice of the finding under clause (i), the Federal Deposit Insurance Corporation does not object, in writing, to the finding, based on a determination that the exemption presents an unacceptable risk to the Deposit Insurance Fund.

;

(iii)

by striking the Board and inserting the following:

(A)

In general

The Board

; and

(iv)

by adding at the end the following:

(B)

Additional exemptions

(i)

National banks

The Comptroller of the Currency may, by order, exempt a transaction of a national bank from the requirements of this section if—

(I)

the Board and the Office of the Comptroller of the Currency jointly find the exemption to be in the public interest and consistent with the purposes of this section and notify the Federal Deposit Insurance Corporation of such finding; and

(II)

before the end of the 60-day period beginning on the date on which the Federal Deposit Insurance Corporation receives notice of the finding under subclause (I), the Federal Deposit Insurance Corporation does not object, in writing, to the finding, based on a determination that the exemption presents an unacceptable risk to the Deposit Insurance Fund.

(ii)

State banks

The Federal Deposit Insurance Corporation may, by order, exempt a transaction of a State bank from the requirements of this section if—

(I)

the Board and the Federal Deposit Insurance Corporation jointly find that the exemption is in the public interest and consistent with the purposes of this section; and

(II)

the Federal Deposit Insurance Corporation finds that the exemption does not present an unacceptable risk to the Deposit Insurance Fund.

; and