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The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Feb 1, 2017.
Return to Prudent Banking Act of 2017
This bill prohibits an insured depository institution from affiliating with any person or firm engaged principally in, among other things, issuing or selling stocks, bonds, notes, or other securities. Officers, directors and employees of securities firms are prohibited from simultaneously serving as an officer, director, or employee of a depository institution, except in specified circumstances. Any such individual serving as an officer, director, employee, or other institution-affiliated party of any insured depository institution must terminate such service as soon as practicable after enactment of this bill.
Any affiliation of an insured depository institution with any broker, dealer, investment adviser, or investment company must be terminated as soon as practicable.
No entity issuing or selling stocks, bonds, or other securities may engage in the business of receiving deposits, which includes the establishment and maintenance of transaction accounts, as defined in the Federal Reserve Act.
This bill declares that Congress ratifies the interpretation by the Supreme Court of specified statutory language in Investment Company Institute v. Camp (ICI) regarding permissible activities of banks and securities firms. It further declares that the reasoning of the Court in that case shall continue to apply to the limitations placed upon security affiliations under the Federal Deposit Insurance Act as enacted by this bill. No federal banking agency or federal court shall issue an interpretation regarding such security affiliations that is narrower than that of the court in ICI.
This bill repeals certain provisions of the Gramm-Leach-Bliley Act, including those pertaining to regulation of financial holding companies and the conditions for engaging in financial activities.