In the nature of a substitute.

SA 3739. Mr. REID (for Mr. Dodd (for himself and Mrs. Lincoln))
proposed an amendment to the bill 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; as
follows:

Strike all after the enacting clause and insert the
following:

SECTION 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.

[[Page S2817]]

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.

[[Page S2818]]

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.

[[Page S2819]]

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.

SEC. 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.

[[Page S2820]]

(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)).

SEC. 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.

SEC. 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.

TITLE I--FINANCIAL STABILITY

SEC. 101. SHORT TITLE.

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

SEC. 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.

Subtitle A--Financial Stability Oversight Council

SEC. 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.

SEC. 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

[[Page S2821]]

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.

SEC. 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.

[[Page S2822]]

(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.

SEC. 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.

SEC. 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

[[Page S2823]]

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.

SEC. 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.

SEC. 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.

SEC. 118. COUNCIL FUNDING.

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

SEC. 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.

SEC. 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.

[[Page S2824]]

(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.

SEC. 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.

Subtitle B--Office of Financial Research

SEC. 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).

SEC. 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--

[[Page S2825]]

(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.''.

SEC. 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.

SEC. 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.

[[Page S2826]]

(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.

SEC. 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.

SEC. 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.

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 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.--

[[Page S2827]]

(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.

SEC. 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.

SEC. 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.

SEC. 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).

SEC. 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.--

[[Page S2828]]

(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

[[Page S2829]]

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.

SEC. 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.

SEC. 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.

SEC. 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.

SEC. 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.

SEC. 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.
TITLE II--ORDERLY LIQUIDATION AUTHORITY

SEC. 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.

[[Page S2830]]

(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.

SEC. 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.--

[[Page S2831]]

(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).

SEC. 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

[[Page S2832]]

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.

SEC. 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.

SEC. 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

[[Page S2833]]

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.

SEC. 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.

SEC. 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.

SEC. 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.

SEC. 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.

SEC. 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;

[[Page S2834]]

(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--

[[Page S2835]]

(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

[[Page S2836]]

(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

[[Page S2837]]

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;

[[Page S2838]]

(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.

[[Page S2839]]

(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;

[[Page S2840]]

(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

[[Page S2841]]

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

[[Page S2842]]

(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

[[Page S2843]]

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

[[Page S2844]]

(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.

[[Page S2845]]

(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,

[[Page S2846]]

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,

[[Page S2847]]

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.

SEC. 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,''.
TITLE III--TRANSFER OF POWERS TO THE COMPTROLLER OF THE CURRENCY, THE
CORPORATION, AND THE BOARD OF GOVERNORS

SEC. 300. SHORT TITLE.

This title may be cited as the ``Enhancing Financial
Institution Safety and Soundness Act of 2010''.

SEC. 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.

SEC. 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.
Subtitle A--Transfer of Powers and Duties

SEC. 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).

SEC. 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

[[Page S2848]]

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

[[Page S2849]]

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.

SEC. 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.

SEC. 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:

``SEC. 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.

SEC. 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,''.

SEC. 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,

[[Page S2850]]

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.

SEC. 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.

SEC. 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:
``Sec. 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

[[Page S2851]]

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.

SEC. 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).
Subtitle B--Transitional Provisions

SEC. 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).

SEC. 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.

[[Page S2852]]

(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.

[[Page S2853]]

(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.

SEC. 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.

SEC. 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

[[Page S2854]]

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.

SEC. 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.

SEC. 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.

Subtitle C--Federal Deposit Insurance Corporation

SEC. 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.

SEC. 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.

Subtitle D--Termination of Federal Thrift Charter

SEC. 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.

SEC. 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.

TITLE IV--REGULATION OF ADVISERS TO HEDGE FUNDS AND OTHERS

SEC. 401. SHORT TITLE.

This title may be cited as the ``Private Fund Investment
Advisers Registration Act of 2010''.

SEC. 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

[[Page S2855]]

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.

SEC. 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.''.

SEC. 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.''.

SEC. 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''.

SEC. 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

[[Page S2856]]

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.).''.

SEC. 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.''.

SEC. 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.''.

SEC. 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.

SEC. 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.''.

SEC. 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:

``SEC. 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.''.

SEC. 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.

SEC. 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.

SEC. 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.

SEC. 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.

SEC. 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.

TITLE V--INSURANCE

Subtitle A--Office of National Insurance

SEC. 501. SHORT TITLE.

This subtitle may be cited as the ``Office of National
Insurance Act of 2010''.

SEC. 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:

``SEC. 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.

[[Page S2857]]

``(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:

[[Page S2858]]

``(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.

``SEC. 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.''.

Subtitle B--State-based Insurance Reform

SEC. 511. SHORT TITLE.

This subtitle may be cited as the ``Nonadmitted and
Reinsurance Reform Act of 2010''.

SEC. 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.

PART I--NONADMITTED INSURANCE

SEC. 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.

SEC. 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.

[[Page S2859]]

(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.

SEC. 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.

SEC. 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.

SEC. 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.

SEC. 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.

SEC. 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

[[Page S2860]]

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.

PART II--REINSURANCE

SEC. 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.

SEC. 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.

SEC. 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.

PART III--RULE OF CONSTRUCTION

SEC. 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.

SEC. 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.

TITLE VI--IMPROVEMENTS TO REGULATION OF BANK AND SAVINGS ASSOCIATION
HOLDING COMPANIES AND DEPOSITORY INSTITUTIONS

SEC. 601. SHORT TITLE.

This title may be cited as the ``Bank and Savings
Association Holding Company and Depository Institution
Regulatory Improvements Act of 2010''.

SEC. 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)).

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.

(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,

[[Page S2861]]

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).

SEC. 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

[[Page S2862]]

(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.

SEC. 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:

``SEC. 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.''.

SEC. 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

[[Page S2863]]

(B)'' and inserting ``subparagraphs (A), (B), and (C)''.
(b) Effective Date.--The amendments made by this section
shall take effect on the transfer date.

SEC. 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.

SEC. 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

(B) by adding at the end the following:
``(4) Amounts of covered transactions.--The Board may issue
such regulations or interpretations as the Board determines
are necessary or appropriate with respect to the manner in
which a netting agreement may be taken into account in
determining the amount of a covered transaction between a
member bank or a subsidiary and an affiliate, including the
extent to which netting agreements between a member bank or a
subsidiary and an affiliate may be taken into account in
determining whether a covered transaction is fully secured
for purposes of subsection (d)(4). An interpretation under
this paragraph with respect to a specific member bank,
subsidiary, or affiliate shall be issued jointly with the
appropriate Federal banking agency for such member bank,
subsidiary, or affiliate.''.
(b) Transactions With Affiliates.--Section 23B(e) of the
Federal Reserve Act (12 U.S.C. 371c-1(e)) is amended--
(1) by striking the undesignated matter following
subparagraph (B);
(2) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively, and adjusting the clause margins
accordingly;
(3) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively, and adjusting the
subparagraph margins accordingly;
(4) by striking ``The Board'' and inserting the following:
``(1) In general.--The Board'';
(5) in paragraph (1)(B), as so redesignated--
(A) in the matter preceding clause (i), by inserting before
``regulations'' the following: ``subject to paragraph (2), if
the Board finds that an exemption or exclusion is in the
public interest and is consistent with the purposes of this
section, and notifies the Federal Deposit Insurance
Corporation of such finding,''; and
(B) in clause (ii), by striking the comma at the end and
inserting a period; and
(6) by adding at the end the following:
``(2) Exception.--The Board may grant an exemption or
exclusion under this subsection only if, during the 60-day
period beginning on the date of receipt of notice of the
finding from the Board under paragraph (1)(B), the Federal
Deposit Insurance Corporation does not object, in writing, to
such exemption or exclusion, based on a determination that
the exemption presents an unacceptable risk to the Deposit
Insurance Fund.''.
(c) Home Owners' Loan Act.--Section 11 of the Home Owners'
Loan Act (12 U.S.C. 1468) is amended by adding at the end the
following:
``(d) Exemptions.--
``(1) Federal savings associations.--The Comptroller of the
Currency may, by order, exempt a transaction of a Federal
savings association from the requirements of this section
if--
``(A) 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
``(B) 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 subparagraph (A), 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.
``(2) State savings association.--The Federal Deposit
Insurance Corporation may, by order, exempt a transaction of
a State savings association from the requirements of this
section if the Board and the Federal Deposit Insurance
Corporation jointly find that--
``(A) the exemption is in the public interest and
consistent with the purposes of this section; and
``(B) the exemption does not present an unacceptable risk
to the Deposit Insurance Fund.''.
(d) Effective Date.--The amendments made by this section
shall take effect 1 year after the transfer date.

SEC. 609. ELIMINATING EXCEPTIONS FOR TRANSACTIONS WITH
FINANCIAL SUBSIDIARIES.

(a) Amendment.--Section 23A(e) of the Federal Reserve Act
(12 U.S.C. 371c(e)) is amended--
(1) by striking paragraph (3); and
(2) by redesignating paragraph (4) as paragraph (3).

[[Page S2864]]

(b) Prospective Application of Amendment.--The amendments
made by this section shall apply with respect to any covered
transaction between a bank and a subsidiary of the bank, as
those terms are defined in section 23A of the Federal Reserve
Act (12 U.S.C. 371c), that is entered into on or after the
date of enactment of this Act.
(c) Effective Date.--The amendments made by this section
shall take effect 1 year after the transfer date.

SEC. 610. LENDING LIMITS APPLICABLE TO CREDIT EXPOSURE ON
DERIVATIVE TRANSACTIONS, REPURCHASE AGREEMENTS,
REVERSE REPURCHASE AGREEMENTS, AND SECURITIES
LENDING AND BORROWING TRANSACTIONS.

(a) National Banks.--Section 5200(b) of the Revised
Statutes of the United States (12 U.S.C. 84(b)) is amended--
(1) in paragraph (1), by striking ``shall include'' and all
that follows through the end of the paragraph and inserting
the following: ``shall include--
``(A) all direct or indirect advances of funds to a person
made on the basis of any obligation of that person to repay
the funds or repayable from specific property pledged by or
on behalf of the person;
``(B) to the extent specified by the Comptroller of the
Currency, any liability of a national banking association to
advance funds to or on behalf of a person pursuant to a
contractual commitment; and
``(C) any credit exposure to a person arising from a
derivative transaction, repurchase agreement, reverse
repurchase agreement, securities lending transaction, or
securities borrowing transaction between the national banking
association and the person;'';
(2) in paragraph (2), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following:
``(3) the term `derivative transaction' includes any
transaction that is a contract, agreement, swap, warrant,
note, or option that is based, in whole or in part, on the
value of, any interest in, or any quantitative measure or the
occurrence of any event relating to, one or more commodities,
securities, currencies, interest or other rates, indices, or
other assets.''.
(b) Savings Associations.--Section 5(u)(3) of the Home
Owners' Loan Act (12 U.S.C. 1464(u)(3)) is amended by
striking ``Director'' each place that term appears and
inserting ``Comptroller of the Currency''.
(c) Effective Date.--The amendments made by this section
shall take effect 1 year after the transfer date.

SEC. 611. APPLICATION OF NATIONAL BANK LENDING LIMITS TO
INSURED STATE BANKS.

(a) Amendment.--Section 18 of the Federal Deposit Insurance
Act (12 U.S.C. 1828) is amended by adding at the end the
following:
``(y) Application of Lending Limits to Insured State
Banks.--Section 5200 of the Revised Statutes of the United
States (12 U.S.C. 84) shall apply to each insured State bank,
in the same manner and to the same extent as if the insured
State bank were a national banking association.''.
(b) Effective Date.--The amendment made by this section
shall take effect 1 year after the transfer date.

SEC. 612. RESTRICTION ON CONVERSIONS OF TROUBLED BANKS.

(a) Conversion of a National Banking Association to a State
Bank.--The Act entitled ``An Act to provide for the
conversion of national banking associations into and their
merger or consolidation with State banks, and for other
purposes.'' (12 U.S.C. 214 et seq.) is amended by adding at
the end the following:

``SEC. 10. PROHIBITION ON CONVERSION.

``A national banking association may not convert to a State
bank or State savings association during any period in which
the national banking association is subject to a cease and
desist order (or other formal enforcement order) issued by,
or a memorandum of understanding entered into with, the
Comptroller of the Currency with respect to a significant
supervisory matter.''.
(b) Conversion of a State Bank to a National Bank.--Section
5154 of the Revised Statutes of the United States (12 U.S.C.
35) is amended by adding at the end the following: ``The
Comptroller of the Currency may not approve the conversion of
a State bank or State savings association to a national
banking association during any period in which the State bank
or State savings association is subject to a cease and desist
order (or other formal enforcement order) issued by, or a
memorandum of understanding entered into with, a State bank
supervisor or the appropriate Federal banking agency with
respect to a significant supervisory matter.''.
(c) Conversion of a Federal Savings Association to a
National or State Bank or State Savings Association.--Section
5(i) of the Home Owners' Loan Act (12 U.S.C. 1464(i)) is
amended by adding at the end the following:
``(6) Limitation on certain conversions by federal savings
associations.--A Federal savings association may not convert
to a national bank or State bank or State savings association
during any period in which the Federal savings association is
subject to a cease and desist order (or other formal
enforcement order) issued by, or a memorandum of
understanding entered into with, the Office of Thrift
Supervision or the Comptroller of the Currency with respect
to a significant supervisory matter.''.

SEC. 613. DE NOVO BRANCHING INTO STATES.

(a) National Banks.--Section 5155(g)(1)(A) of the Revised
Statutes of the United States (12 U.S.C. 36(g)(1)(A)) is
amended to read as follows:
``(A) the law of the State in which the branch is located,
or is to be located, would permit establishment of the
branch, if the national bank were a State bank chartered by
such State; and''.
(b) State Insured Banks.--Section 18(d)(4)(A)(i) of the
Federal Deposit Insurance Act (12 U.S.C. 1828(d)(4)(A)(i)) is
amended to read as follows:
``(i) the law of the State in which the branch is located,
or is to be located, would permit establishment of the
branch, if the bank were a State bank chartered by such
State; and''.

SEC. 614. LENDING LIMITS TO INSIDERS.

(a) Extensions of Credit.--Section 22(h)(9)(D)(i) of the
Federal Reserve Act (12 U.S.C. 375b(9)(D)(i)) is amended--
(1) by striking the period at the end and inserting ``;
or'';
(2) by striking ``a person'' and inserting ``the person'';
(3) by striking ``extends credit by making'' and inserting
the following: ``extends credit to a person by--

``(I) making''; and

(4) by adding at the end the following:

``(II) having credit exposure to the person arising from a
derivative transaction (as defined in section 5200(b) of the
Revised Statutes of the United States (12 U.S.C. 84(b))),
repurchase agreement, reverse repurchase agreement,
securities lending transaction, or securities borrowing
transaction between the member bank and the person.''.

(b) Effective Date.--The amendments made by this section
shall take effect 1 year after the transfer date.

SEC. 615. LIMITATIONS ON PURCHASES OF ASSETS FROM INSIDERS.

(a) Amendment to the Federal Deposit Insurance Act.--
Section 18 of the Federal Deposit Insurance Act (12 U.S.C.
1828) is amended by adding at the end the following:
``(z) General Prohibition on Sale of Assets.--
``(1) In general.--An insured depository institution may
not purchase an asset from, or sell an asset to, an executive
officer, director, or principal shareholder of the insured
depository institution, or any related interest of such
person (as such terms are defined in section 22(h) of Federal
Reserve Act), unless--
``(A) the transaction is on market terms; and
``(B) if the transaction represents more than 10 percent of
the capital stock and surplus of the insured depository
institution, the transaction has been approved in advance by
a majority of the members of the board of directors of the
insured depository institution who do not have an interest in
the transaction.
``(2) Rulemaking.--The Board of Governors of the Federal
Reserve System may issue such rules as may be necessary to
define terms and to carry out the purposes this subsection.
Before proposing or adopting a rule under this paragraph, the
Board of Governors of the Federal Reserve System shall
consult with the Comptroller of the Currency and the
Corporation as to the terms of the rule.''.
(b) Amendments to the Federal Reserve Act.--Section 22(d)
of the Federal Reserve Act (12 U.S.C. 375) is amended to read
as follows:
``(d) [Reserved]''.
(c) Effective Date.--The amendments made by this section
shall take effect on the transfer date.

SEC. 616. REGULATIONS REGARDING CAPITAL LEVELS OF HOLDING
COMPANIES.

(a) Capital Levels of Bank Holding Companies.--Section 5(b)
of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(b))
is amended by inserting after ``regulations'' the following:
``(including regulations relating to the capital requirements
of bank holding companies)''.
(b) Capital Levels of Savings and Loan Holding Companies.--
Section 10(g)(1) of the Home Owners' Loan Act (12 U.S.C.
1467a(g)(1)) is amended by inserting after ``orders'' the
following: ``(including regulations relating to capital
requirements for savings and loan holding companies)''.
(c) Source of Strength.--The Federal Deposit Insurance Act
(12 U.S.C. 1811 et seq.) is amended by inserting after
section 38 (12 U.S.C. 1831o) the following:

``SEC. 38A. SOURCE OF STRENGTH.

``(a) Holding Companies.--The appropriate Federal banking
agency for a bank holding company or savings and loan holding
company shall require the bank holding company or savings and
loan holding company to serve as a source of financial
strength for any subsidiary of the bank holding company or
savings and loan holding company that is a depository
institution.
``(b) Other Companies.--If an insured depository
institution is not the subsidiary of a bank holding company
or savings and loan holding company, the appropriate Federal
banking agency for the insured depository institution shall
require any company that directly or indirectly controls the
insured depository institution to serve as a source of
financial strength for such institution.
``(c) Reports.--The appropriate Federal banking agency for
an insured depository institution described in subsection (b)
may, from time to time, require the company, or

[[Page S2865]]

a company that directly or indirectly controls the insured
depository institution to submit a report, under oath, for
the purposes of--
``(1) assessing the ability of such company to comply with
the requirement under subsection (b); and
``(2) enforcing the compliance of such company with the
requirement under subsection (b).
``(d) Rules.--Not later than 1 year after the transfer
date, as defined in section 311 of the Enhancing Financial
Institution Safety and Soundness Act of 2010, the appropriate
Federal banking agencies shall jointly issue final rules to
carry out this section.
``(e) Definition.--In this section, the term `source of
financial strength' means the ability of a company that
directly or indirectly owns or controls an insured depository
institution to provide financial assistance to such insured
depository institution in the event of the financial distress
of the insured depository institution.''.
(d) Effective Date.--The amendments made by this section
shall take effect on the transfer date.

SEC. 617. ELIMINATION OF ELECTIVE INVESTMENT BANK HOLDING
COMPANY FRAMEWORK.

(a) Amendment.--Section 17 of the Securities Exchange Act
of 1934 (15 U.S.C. 78q) is amended--
(1) by striking subsection (i); and
(2) by redesignating subsections (j) and (k) as subsections
(i) and (j), respectively.
(b) Effective Date.--The amendments made by this section
shall take effect on the transfer date.

SEC. 618. SECURITIES HOLDING COMPANIES.

(a) Definitions.--In this section--
(1) the term ``associated person of a securities holding
company'' means a person directly or indirectly controlling,
controlled by, or under common control with, a securities
holding company;
(2) the term ``foreign bank'' has the same meaning as in
section 1(b)(7) of the International Banking Act of 1978 (12
U.S.C. 3101(b)(7));
(3) the term ``insured bank'' has the same meaning as in
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813);
(4) the term ``securities holding company''--
(A) means--
(i) a person (other than a natural person) that owns or
controls 1 or more brokers or dealers registered with the
Commission; and
(ii) the associated persons of a person described in clause
(i); and
(B) does not include a person that is--
(i) a nonbank financial company supervised by the Board
under title I;
(ii) an affiliate of an insured bank (other than an
institution described in subparagraphs (D), (F), or (H) of
section 2(c)(2) of the Bank Holding Company Act of 1956 (12
U.S.C. 1841(c)(2)) or an affiliate of a savings association;
(iii) a foreign bank, foreign company, or company that is
described in section 8(a) of the International Banking Act of
1978 (12 U.S.C. 3106(a));
(iv) a foreign bank that controls, directly or indirectly,
a corporation chartered under section 25A of the Federal
Reserve Act (12 U.S.C. 611 et seq.); or
(v) subject to comprehensive consolidated supervision by a
foreign regulator;
(5) the term ``supervised securities holding company''
means a securities holding company that is supervised by the
Board of Governors under this section; and
(6) the terms ``affiliate'', ``bank'', ``bank holding
company'', ``company'', ``control'', ``savings association'',
and ``subsidiary'' have the same meanings as in section 2 of
the Bank Holding Company Act of 1956.
(b) Supervision of a Securities Holding Company Not Having
a Bank or Savings Association Affiliate.--
(1) In general.--A securities holding company that is
required by a foreign regulator or provision of foreign law
to be subject to comprehensive consolidated supervision may
register with the Board of Governors under paragraph (2) to
become a supervised securities holding company. Any
securities holding company filing such a registration shall
be supervised in accordance with this section, and shall
comply with the rules and orders prescribed by the Board of
Governors applicable to supervised securities holding
companies.
(2) Registration as a supervised securities holding
company.--
(A) Registration.--A securities holding company that elects
to be subject to comprehensive consolidated supervision shall
register by filing with the Board of Governors such
information and documents as the Board of Governors, by
regulation, may prescribe as necessary or appropriate in
furtherance of the purposes of this section.
(B) Effective date.--A securities holding company that
registers under subparagraph (A) shall be deemed to be a
supervised securities holding company, effective on the date
that is 45 days after the date of receipt of the registration
information and documents under subparagraph (A) by the Board
of Governors, or within such shorter period as the Board of
Governors, by rule or order, may determine.
(c) Supervision of Securities Holding Companies.--
(1) Recordkeeping and reporting.--
(A) Recordkeeping and reporting required.--Each supervised
securities holding company and each affiliate of a supervised
securities holding company shall make and keep for periods
determined by the Board of Governors such records, furnish
copies of such records, and make such reports, as the Board
of Governors determines to be necessary or appropriate to
carry out this section, to prevent evasions thereof, and to
monitor compliance by the supervised securities holding
company or affiliate with applicable provisions of law.
(B) Form and contents.--
(i) In general.--Any record or report required to be made,
furnished, or kept under this paragraph shall--

(I) be prepared in such form and according to such
specifications (including certification by a registered
public accounting firm), as the Board of Governors may
require; and
(II) be provided promptly to the Board of Governors at any
time, upon request by the Board of Governors.

(ii) Contents.--Records and reports required to be made,
furnished, or kept under this paragraph may include--

(I) a balance sheet or income statement of the supervised
securities holding company or an affiliate of a supervised
securities holding company;
(II) an assessment of the consolidated capital and
liquidity of the supervised securities holding company;
(III) a report by an independent auditor attesting to the
compliance of the supervised securities holding company with
the internal risk management and internal control objectives
of the supervised securities holding company; and
(IV) a report concerning the extent to which the supervised
securities holding company or affiliate has complied with the
provisions of this section and any regulations prescribed and
orders issued under this section.

(2) Use of existing reports.--
(A) In general.--The Board of Governors shall, to the
fullest extent possible, accept reports in fulfillment of the
requirements of this paragraph that a supervised securities
holding company or an affiliate of a supervised securities
holding company has been required to provide to another
regulatory agency or a self-regulatory organization.
(B) Availability.--A supervised securities holding company
or an affiliate of a supervised securities holding company
shall promptly provide to the Board of Governors, at the
request of the Board of Governors, any report described in
subparagraph (A), as permitted by law.
(3) Examination authority.--
(A) Focus of examination authority.--The Board of Governors
may make examinations of any supervised securities holding
company and any affiliate of a supervised securities holding
company to carry out this subsection, to prevent evasions
thereof, and to monitor compliance by the supervised
securities holding company or affiliate with applicable
provisions of law.
(B) Deference to other examinations.--For purposes of this
subparagraph, the Board of Governors shall, to the fullest
extent possible, use the reports of examination made by other
appropriate Federal or State regulatory authorities with
respect to any functionally regulated subsidiary or any
institution described in subparagraph (D), (F), or (H) of
section 2(c)(2) of the Bank Holding Company Act of 1956 (12
U.S.C. 1841(c)(2)).
(d) Capital and Risk Management.--
(1) In general.--The Board of Governors shall, by
regulation or order, prescribe capital adequacy and other
risk management standards for supervised securities holding
companies that are appropriate to protect the safety and
soundness of the supervised securities holding companies and
address the risks posed to financial stability by supervised
securities holding companies.
(2) Differentiation.--In imposing standards under this
subsection, the Board of Governors may differentiate among
supervised securities holding companies on an individual
basis, or by category, taking into consideration the
requirements under paragraph (3).
(3) Content.--Any standards imposed on a supervised
securities holding company under this subsection shall take
into account--
(A) the differences among types of business activities
carried out by the supervised securities holding company;
(B) the amount and nature of the financial assets of the
supervised securities holding company;
(C) the amount and nature of the liabilities of the
supervised securities holding company, including the degree
of reliance on short-term funding;
(D) the extent and nature of the off-balance sheet
exposures of the supervised securities holding company;
(E) the extent and nature of the transactions and
relationships of the supervised securities holding company
with other financial companies;
(F) the importance of the supervised securities holding
company as a source of credit for households, businesses, and
State and local governments, and as a source of liquidity for
the financial system; and
(G) the nature, scope, and mix of the activities of the
supervised securities holding company.
(4) Notice.--A capital requirement imposed under this
subsection may not take effect earlier than 180 days after
the date on which a supervised securities holding company is
provided notice of the capital requirement.

[[Page S2866]]

(e) Exception for Banks.--No bank shall be subject to any
of the requirements set forth in subsections (c) and (d).
(f) Other Provisions of Law Applicable to Supervised
Securities Holding Companies.--
(1) Federal deposit insurance act.--Subsections (b), (c)
through (s), and (u) of section 8 of the Federal Deposit
Insurance Act (12 U.S.C. 1818) shall apply to any supervised
securities holding company, and to any subsidiary (other than
a bank or an institution described in subparagraph (D), (F),
or (H) of section 2(c)(2) of the Bank Holding Company Act of
1956 (12 U.S.C. 1841(c)(2))) of a supervised securities
holding company, in the same manner as such subsections apply
to a bank holding company for which the Board of Governors is
the appropriate Federal banking agency. For purposes of
applying such subsections to a supervised securities holding
company or a subsidiary (other than a bank or an institution
described in subparagraph (D), (F), or (H) of section 2(c)(2)
of the Bank Holding Company Act of 1956 (12 U.S.C.
1841(c)(2))) of a supervised securities holding company, the
Board of Governors shall be deemed the appropriate Federal
banking agency for the supervised securities holding company
or subsidiary.
(2) Bank holding company act of 1956.--Except as the Board
of Governors may otherwise provide by regulation or order, a
supervised securities holding company shall be subject to the
provisions of the Bank Holding Company Act of 1956 (12 U.S.C.
1841 et seq.) in the same manner and to the same extent a
bank holding company is subject to such provisions, except
that a supervised securities holding company may not, by
reason of this paragraph, be deemed to be a bank holding
company for purposes of section 4 of the Bank Holding Company
Act of 1956 (12 U.S.C. 1843).

SEC. 619. RESTRICTIONS ON CAPITAL MARKET ACTIVITY BY BANKS
AND BANK HOLDING COMPANIES.

(a) Definitions.--In this section--
(1) the terms ``hedge fund'' and ``private equity fund''
mean a company or other entity that is exempt from
registration as an investment company pursuant to section
3(c)(1) or 3(c)(7) of the Investment Company Act of 1940 (15
U.S.C. 80a-3(c)(1) or 80a-3(c)(7)), or a similar fund, as
jointly determined by the appropriate Federal banking
agencies;
(2) the term ``proprietary trading''--
(A) means purchasing or selling, or otherwise acquiring or
disposing of, stocks, bonds, options, commodities,
derivatives, or other financial instruments by an insured
depository institution, a company that controls, directly or
indirectly, an insured depository institution or is treated
as a bank holding company for purposes of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841 et seq.), and any
subsidiary of such institution or company, for the trading
book (or such other portfolio as the Federal banking agencies
may determine) of such institution, company, or subsidiary;
and
(B) subject to such restrictions as the Federal banking
agencies may determine, does not include purchasing or
selling, or otherwise acquiring or disposing of, stocks,
bonds, options, commodities, derivatives, or other financial
instruments on behalf of a customer, as part of market making
activities, or otherwise in connection with or in
facilitation of customer relationships, including risk-
mitigating hedging activities related to such a purchase,
sale, acquisition, or disposal; and
(3) the term ``sponsoring'', when used with respect to a
hedge fund or private equity fund, means--
(A) serving as a general partner, managing member, or
trustee of the fund;
(B) in any manner selecting or controlling (or having
employees, officers, directors, or agents who constitute) a
majority of the directors, trustees, or management of the
fund; or
(C) sharing with the fund, for corporate, marketing,
promotional, or other purposes, the same name or a variation
of the same name.
(b) Prohibition on Proprietary Trading.--
(1) In general.--Subject to the recommendations and
modifications of the Council under subsection (g), and except
as provided in paragraph (2) or (3), the appropriate Federal
banking agencies shall, through a rulemaking under subsection
(g), jointly prohibit proprietary trading by an insured
depository institution, a company that controls, directly or
indirectly, an insured depository institution or is treated
as a bank holding company for purposes of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841 et seq.), and any
subsidiary of such institution or company.
(2) Excepted obligations.--
(A) In general.--The prohibition under this subsection
shall not apply with respect to an investment that is
otherwise authorized by Federal law in--
(i) obligations of the United States or any agency of the
United States, including obligations fully guaranteed as to
principal and interest by the United States or an agency of
the United States;
(ii) obligations, participations, or other instruments of,
or issued by, the Government National Mortgage Association,
the Federal National Mortgage Association, or the Federal
Home Loan Mortgage Corporation, including obligations fully
guaranteed as to principal and interest by such entities; and
(iii) obligations of any State or any political subdivision
of a State.
(B) Conditions.--The appropriate Federal banking agencies
may impose conditions on the conduct of investments described
in subparagraph (A).
(C) Rule of construction.--Nothing in subparagraph (A) may
be construed to grant any authority to any person that is not
otherwise provided in Federal law.
(3) Foreign activities.--An investment or activity
conducted by a company pursuant to paragraph (9) or (13) of
section 4(c) of the Bank Holding Company Act of 1956 (12
U.S.C. 1843(c)) solely outside of the United States shall not
be subject to the prohibition under paragraph (1), provided
that the company is not directly or indirectly controlled by
a company that is organized under the laws of the United
States or of a State.
(c) Prohibition on Sponsoring and Investing in Hedge Funds
and Private Equity Funds.--
(1) In general.--Except as provided in paragraph (2), and
subject to the recommendations and modifications of the
Council under subsection (g), the appropriate Federal banking
agencies shall, through a rulemaking under subsection (g),
jointly prohibit an insured depository institution, a company
that controls, directly or indirectly, an insured depository
institution or is treated as a bank holding company for
purposes of the Bank Holding Company Act of 1956 (12 U.S.C.
1841 et seq.), or any subsidiary of such institution or
company, from sponsoring or investing in a hedge fund or a
private equity fund.
(2) Application to foreign activities of foreign firms.--An
investment or activity conducted by a company pursuant to
paragraph (9) or (13) of section 4(c) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1843(c)) solely outside of the
United States shall not be subject to the prohibitions and
restrictions under paragraph (1), provided that the company
is not directly or indirectly controlled by a company that is
organized under the laws of the United States or of a State.
(d) Investments in Small Business Investment Companies and
Investments Designed to Promote the Public Welfare.--
(1) In general.--A prohibition imposed by the appropriate
Federal banking agencies under subsection (c) shall not apply
with respect an investment otherwise authorized under Federal
law that is--
(A) an investment in a small business investment company,
as that term is defined in section 103 of the Small Business
Investment Act of 1958 (15 U.S.C. 662); or
(B) designed primarily to promote the public welfare, as
provided in the 11th paragraph of section 5136 of the Revised
Statutes (12 U.S.C. 24).
(2) Rule of construction.--Nothing in paragraph (1) may be
construed to grant any authority to any person that is not
otherwise provided in Federal law.
(e) Limitations on Relationships With Hedge Funds and
Private Equity Funds.--
(1) Covered transactions.--An insured depository
institution, a company that controls, directly or indirectly,
an insured depository institution or is treated as a bank
holding company for purposes of the Bank Holding Company Act
of 1956 (12 U.S.C. 1841 et seq.), and any subsidiary of such
institution or company that serves, directly or indirectly,
as the investment manager or investment adviser to a hedge
fund or private equity fund may not enter into a covered
transaction, as defined in section 23A of the Federal Reserve
Act (12 U.S.C. 371c) with such hedge fund or private equity
fund.
(2) Affiliation.--An insured depository institution, a
company that controls, directly or indirectly, an insured
depository institution or is treated as a bank holding
company for purposes of the Bank Holding Company Act of 1956
(12 U.S.C. 1841 et seq.), and any subsidiary of such
institution or company that serves, directly or indirectly,
as the investment manager or investment adviser to a hedge
fund or private equity fund shall be subject to section 23B
of the Federal Reserve Act (12 U.S.C. 371c-1) as if such
institution, company, or subsidiary were a member bank and
such hedge fund or private equity fund were an affiliate.
(f) Capital and Quantitative Limitations for Certain
Nonbank Financial Companies.--
(1) In general.--Except as provided in paragraph (2), and
subject to the recommendations and modifications of the
Council under subsection (g), the Board of Governors shall
adopt rules imposing additional capital requirements and
specifying additional quantitative limits for nonbank
financial companies supervised by the Board of Governors
under section 113 that engage in proprietary trading or
sponsoring and investing in hedge funds and private equity
funds.
(2) Exceptions.--The rules under this subsection shall not
apply with respect to the trading of an investment that is
otherwise authorized by Federal law--
(A) in obligations of the United States or any agency of
the United States, including obligations fully guaranteed as
to principal and interest by the United States or an agency
of the United States;
(B) in obligations, participations, or other instruments
of, or issued by, the Government National Mortgage
Association, the Federal National Mortgage Association, or
the Federal Home Loan Mortgage Corporation, including
obligations fully guaranteed as to principal and interest by
such entities;

[[Page S2867]]

(C) in obligations of any State or any political
subdivision of a State;
(D) in a small business investment company, as that term is
defined in section 103 of the Small Business Investment Act
of 1958 (15 U.S.C. 662); or
(E) that is designed primarily to promote the public
welfare, as provided in the 11th paragraph of section 5136 of
the Revised Statutes (12 U.S.C. 24).
(g) Council Study and Rulemaking.--
(1) Study and recommendations.--Not later than 6 months
after the date of enactment of this Act, the Council--
(A) shall complete a study of the definitions under
subsection (a) and the other provisions under subsections (b)
through (f), to assess the extent to which the definitions
under subsection (a) and the implementation of subsections
(a) through (f) would--
(i) promote and enhance the safety and soundness of
depository institutions and the affiliates of depository
institutions;
(ii) protect taxpayers and enhance financial stability by
minimizing the risk that depository institutions and the
affiliates of depository institutions will engage in unsafe
and unsound activities;
(iii) limit the inappropriate transfer of Federal subsidies
from institutions that benefit from deposit insurance and
liquidity facilities of the Federal Government to unregulated
entities;
(iv) reduce inappropriate conflicts of interest between the
self-interest of depository institutions, affiliates of
depository institutions, and financial companies supervised
by the Board, and the interests of the customers of such
institutions and companies;
(v) raise the cost of credit or other financial services,
reduce the availability of credit or other financial
services, or impose other costs on households and businesses
in the United States;
(vi) limit activities that have caused undue risk or loss
in depository institutions, affiliates of depository
institutions, and financial companies supervised by the Board
of Governors, or that might reasonably be expected to create
undue risk or loss in such institutions, affiliates, and
companies; and
(vii) appropriately accommodates the business of insurance
within an insurance company subject to regulation in
accordance with State insurance company investment laws;
(B) shall make recommendations regarding the definitions
under subsection (a) and the implementation of other
provisions under subsections (b) through (f), including any
modifications to the definitions, prohibitions, requirements,
and limitations contained therein that the Council determines
would more effectively implement the purposes of this
section; and
(C) may make recommendations for prohibiting the conduct of
the activities described in subsections (b) and (c) above a
specific threshold amount and imposing additional capital
requirements on activities conducted below such threshold
amount.
(2) Rulemaking.--Not earlier than the date of completion of
the study required under paragraph (1), and not later than 9
months after the date of completion of such study--
(A) the appropriate Federal banking agencies shall jointly
issue final regulations implementing subsections (b) through
(e), which shall reflect any recommendations or modifications
made by the Council pursuant to paragraph (1)(B); and
(B) the Board of Governors shall issue final regulations
implementing subsection (f), which shall reflect any
recommendations or modifications made by the Council pursuant
to paragraph (1)(B).
(h) Transition.--
(1) In general.--The final regulations issued by the
appropriate Federal banking agencies and the Board of
Governors under subsection (g)(2) shall provide that,
effective 2 years after the date on which such final
regulations are issued, no insured depository institution,
company that controls, directly or indirectly, an insured
depository institution, company that is treated as a bank
holding company for purposes of the Bank Holding Company Act
of 1956 (12 U.S.C. 1841 et seq.), or subsidiary of such
institution or company, may retain any investment or
relationship prohibited under such regulations.
(2) Extension.--
(A) In general.--The appropriate Federal banking agency for
an insured depository institution or a company described in
paragraph (1) may, upon the application of any such company,
extend the 2-year period under paragraph (1) with respect to
such company, if the appropriate Federal banking agency
determines that an extension would not be detrimental to the
public interest.
(B) Time period for extension.--An extension granted under
subparagraph (A) may not exceed--
(i) 1 year for each determination made by the appropriate
Federal banking agency under subparagraph (A); and
(ii) a total of 3 years with respect to any 1 company.

SEC. 620. CONCENTRATION LIMITS ON LARGE FINANCIAL FIRMS.

The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et
seq.) is amended by adding at the end the following:

``SEC. 13. CONCENTRATION LIMITS ON LARGE FINANCIAL FIRMS.

``(a) Definitions.--In this section--
``(1) the term `Council' means the Financial Stability
Oversight Council;
``(2) the term `financial company' means--
``(A) an insured depository institution;
``(B) a bank holding company;
``(C) a savings and loan holding company;
``(D) a company that controls an insured depository
institution;
``(E) a nonbank financial company supervised by the Board
under title I of the Restoring American Financial Stability
Act of 2010; and
``(F) a foreign bank or company that is treated as a bank
holding company for purposes of this Act; and
``(3) the term `liabilities' means--
``(A) with respect to a United States financial company--
``(i) the total risk-weighted assets of the financial
company, as determined under the risk-based capital rules
applicable to bank holding companies, as adjusted to reflect
exposures that are deducted from regulatory capital; less
``(ii) the total regulatory capital of the financial
company under the risk-based capital rules applicable to bank
holding companies;
``(B) with respect to a foreign-based financial company--
``(i) the total risk-weighted assets of the United States
operations of the financial company, as determined under the
applicable risk-based capital rules, as adjusted to reflect
exposures that are deducted from regulatory capital; less
``(ii) the total regulatory capital of the United States
operations of the financial company, as determined under the
applicable risk-based capital rules; and
``(C) with respect to an insurance company or other nonbank
financial company supervised by the Board, such assets of the
company as the Board shall specify by rule, in order to
provide for consistent and equitable treatment of such
companies.
``(b) Concentration Limit.--Subject to the recommendations
by the Council under subsection (e), a financial company may
not merge or consolidate with, acquire all or substantially
all of the assets of, or otherwise acquire control of,
another company, if the total consolidated liabilities of the
acquiring financial company upon consummation of the
transaction would exceed 10 percent of the aggregate
consolidated liabilities of all financial companies at the
end of the calendar year preceding the transaction.
``(c) Exception to Concentration Limit.--With the prior
written consent of the Board, the concentration limit under
subsection (b) shall not apply to an acquisition--
``(1) of a bank in default or in danger of default;
``(2) with respect to which assistance is provided by the
Federal Deposit Insurance Corporation under section 13(c) of
the Federal Deposit Insurance Act (12 U.S.C. 1823(c)); or
``(3) that would result only in a de minimis increase in
the liabilities of the financial company.
``(d) Rulemaking and Guidance.--The Board shall issue
regulations implementing this section in accordance with the
recommendations of the Council under subsection (e),
including the definition of terms, as necessary. The Board
may issue interpretations or guidance regarding the
application of this section to an individual financial
company or to financial companies in general.
``(e) Council Study and Rulemaking.--
``(1) Study and recommendations.--Not later than 6 months
after the date of enactment of this section, the Council
shall--
``(A) complete a study of the extent to which the
concentration limit under this section would affect financial
stability, moral hazard in the financial system, the
efficiency and competitiveness of United States financial
firms and financial markets, and the cost and availability of
credit and other financial services to households and
businesses in the United States; and
``(B) make recommendations regarding any modifications to
the concentration limit that the Council determines would
more effectively implement this section.
``(2) Rulemaking.--Not later than 9 months after the date
of completion of the study under paragraph (1), and
notwithstanding subsections (b) and (d), the Board shall
issue final regulations implementing this section, which
shall reflect any recommendations by the Council under
paragraph (1)(B).''.

TITLE VII--WALL STREET TRANSPARENCY AND ACCOUNTABILITY

SEC. 701. SHORT TITLE.

This title may be cited as the ``Wall Street Transparency
and Accountability Act of 2010''.

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

PART I--REGULATORY AUTHORITY

SEC. 711. DEFINITIONS.

In this subtitle, the terms ``prudential regulator'',
``swap'', ``swap dealer'', ``major swap participant'', ``swap
data repository'', ``associated person of a swap dealer or
major swap participant'', ``eligible contract participant'',
``swap execution facility'', ``security-based swap'',
``security-based swap dealer'', ``major security-based swap
participant'', ``swap data repository'', and ``associated
person of a security-based swap dealer or major security-
based swap participant'' have the meanings given the terms in
section 1a of the Commodity Exchange Act (7 U.S.C. 1a).

SEC. 712. REVIEW OF REGULATORY AUTHORITY.

(a) Regulatory Authority.--
(1) In general.--Except as provided in paragraphs (4) and
(8), the Commodity Futures Trading Commission and the
Securities

[[Page S2868]]

and Exchange Commission shall each prescribe such regulations
as may be necessary to carry out the purposes of this title.
(2) Coordination, consistency, and comparability.--Both
Commissions required under paragraph (1) to prescribe
regulations shall consult and coordinate with each other for
the purposes of assuring, to the extent possible, that the
regulations prescribed by each such Commission are consistent
and comparable with the regulations prescribed by the other.
(3) Procedures and deadline.--Such regulations shall be
prescribed in accordance with applicable requirements of
title 5, United States Code, and, shall be issued in final
form not later than 180 days after the date of enactment of
this Act.
(4) Applicability.--The requirements of paragraph (1) shall
not apply to an order issued--
(A) in connection with or arising from a violation or
potential violation of any provision of the Commodity
Exchange Act (7 U.S.C. 1 et seq.);
(B) in connection with or arising from a violation or
potential violation of any provision of the securities laws;
or
(C) in any proceeding that is conducted on the record in
accordance with sections 556 and 557 of title 5, United
States Code.
(5) Effect.--Nothing in this subsection authorizes any
consultation or procedure for consultation that is not
consistent with the requirements of subchapter II of chapter
5, and chapter 7, of title 5, United States Code (commonly
known as the ``Administrative Procedure Act'').
(6) Rules; orders.--In developing and promulgating rules or
orders pursuant to this subsection, each Commission shall
consider the views of the prudential regulators.
(7) Treatment of similar products and entities.--
(A) In general.--In adopting rules and orders under this
subsection, the Commodity Futures Trading Commission and the
Securities and Exchange Commission shall treat functionally
or economically similar products or entities described in
paragraphs (1) and (2) in a similar manner.
(B) Effect.--Nothing in this subtitle requires the
Commodity Futures Trading Commission or the Securities and
Exchange Commission to adopt joint rules or orders that treat
functionally or economically similar products or entities
described in paragraphs (1) and (2) in an identical manner.
(8) Mixed swaps.--The Commodity Futures Trading Commission
and the Securities and Exchange Commission shall jointly
prescribe such regulations regarding mixed swaps, as
described in section 1a(47)(D) of the Commodity Exchange Act
(7 U.S.C. 1a(47)(D)) and in section (68)(D) of the Securities
Exchange Act of 1934 (15 U.S.C. (68)(D)), as may be necessary
to carry out the purposes of this title.
(b) Limitation.--
(1) Commodity futures trading commission.--Nothing in this
title, unless specifically provided, confers jurisdiction on
the Commodity Futures Trading Commission to issue a rule,
regulation, or order providing for oversight or regulation
of--
(A) security-based swaps; or
(B) with regard to its activities or functions concerning
security-based swaps--
(i) security-based swap dealers;
(ii) major security-based swap participants;
(iii) security-based swap data repositories;
(iv) persons associated with a security-based swap dealer
or major security-based swap participant;
(v) eligible contract participants with respect to
security-based swaps; or
(vi) swap execution facilities with respect to security-
based swaps.
(2) Securities and exchange commission.--Nothing in this
title, unless specifically provided, confers jurisdiction on
the Securities and Exchange Commission or State securities
regulators to issue a rule, regulation, or order providing
for oversight or regulation of--
(A) swaps; or
(B) with regard to its activities or functions concerning
swaps--
(i) swap dealers;
(ii) major swap participants;
(iii) swap data repositories;
(iv) persons associated with a swap dealer or major swap
participant;
(v) eligible contract participants with respect to swaps;
or
(vi) swap execution facilities with respect to swaps.
(3) Prohibition on certain futures associations and
national securities associations.--
(A) Futures associations.--Notwithstanding any other
provision of law (including regulations), unless otherwise
authorized by this title, no futures association registered
under section 17 of the Commodity Exchange Act (7 U.S.C. 21)
may issue a rule, regulation, or order for the oversight or
regulation of, or otherwise assert jurisdiction over, for any
purpose, any security-based swap, except that this shall not
limit the authority of a national futures association to
examine for compliance with and enforce its rules on
advertising and capital adequacy.
(B) National securities associations.--Notwithstanding any
other provision of law (including regulations), unless
otherwise authorized by this title, no national securities
association registered under section 15A of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-3) may issue a rule,
regulation, or order for the oversight or regulation of, or
otherwise assert jurisdiction over, for any purpose, any
swap, except that this shall not limit the authority of a
national securities association to examine for compliance
with and enforce its rules on advertising and capital
adequacy.
(c) Objection to Commission Regulation.--
(1) Filing of petition for review.--
(A) In general.--If either Commission referred to in this
section determines that a final rule, regulation, or order of
the other Commission conflicts with subsection (a)(4) or (b),
then the complaining Commission may obtain review of the
final rule, regulation, or order in the United States Court
of Appeals for the District of Columbia Circuit by filing in
the court, not later than 60 days after the date of
publication of the final rule, regulation, or order, a
written petition requesting that the rule, regulation, or
order be set aside.
(B) Expedited proceeding.--A proceeding described in
subparagraph (A) shall be expedited by the United States
Court of Appeals for the District of Columbia Circuit.
(2) Transmittal of petition and record.--
(A) In general.--A copy of a petition described in
paragraph (1) shall be transmitted not later than 1 business
day after the date of filing by the complaining Commission to
the Secretary of the responding Commission.
(B) Duty of responding commission.--On receipt of the copy
of a petition described in paragraph (1), the responding
Commission shall file with the United States Court of Appeals
for the District of Columbia Circuit--
(i) a copy of the rule, regulation, or order under review
(including any documents referred to therein); and
(ii) any other materials prescribed by the United States
Court of Appeals for the District of Columbia Circuit.
(3) Standard of review.--The United States Court of Appeals
for the District of Columbia Circuit shall--
(A) give deference to the views of neither Commission; and
(B) determine to affirm or set aside a rule, regulation, or
order of the responding Commission under this subsection,
based on the determination of the court as to whether the
rule, regulation, or order is in conflict with subsection
(a)(4) or (b), as applicable.
(4) Judicial stay.--The filing of a petition by the
complaining Commission pursuant to paragraph (1) shall
operate as a stay of the rule, regulation, or order until the
date on which the determination of the United States Court of
Appeals for the District of Columbia Circuit is final
(including any appeal of the determination).
(d) Adoption of Rules on Uncleared Swaps.--Notwithstanding
subsections (b) and (c), the Commodity Futures Trading
Commission and the Securities and Exchange Commission shall,
after consulting with each other Commission, adopt rules--
(1) to require the maintenance of records of all activities
relating to transactions in swaps and security-based swaps
under the respective jurisdictions of the Commodity Futures
Trading Commission and the Securities and Exchange Commission
that are uncleared;
(2) to make available, consistent with section 8 of the
Commodity Exchange Act (7 U.S.C. 12), to the Securities and
Exchange Commission information relating to swaps
transactions that are uncleared; and
(3) to make available to the Commodity Futures Trading
Commission information relating to security-based swaps
transactions that are uncleared.
(e) Definitions.--Notwithstanding subsections (b) and (c),
the Commodity Futures Trading Commission and the Securities
and Exchange Commission shall jointly adopt rules to define
the term ``security-based swap agreement'' in section
1a(47)(A)(v) of the Commodity Exchange Act (7 U.S.C.
1a(47)(A)(v)) and in section 3(a)(78) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(78)).
(f) Global Rulemaking Timeframe.--Unless otherwise provided
in a particular provision of this title, or an amendment made
by this title, the Commodity Futures Trading Commission or
the Securities and Exchange Commission, or both, shall
individually, and not jointly, promulgate rules and
regulations required of each Commission under this title or
an amendment made by this title not later than 180 days after
the date of enactment of this Act.
(g) Expedited Rulemaking Process.--The Commodity Futures
Trading Commission or the Securities and Exchange Commission,
or both, may use emergency and expedited procedures
(including any administrative or other procedure as
appropriate) to carry out this title and the amendments made
by this title if, in either of the Commissions' discretion,
it considers it necessary to do so.

SEC. 713. RECOMMENDATIONS FOR CHANGES TO PORTFOLIO MARGINING
LAWS.

Not later than 180 days after the date of enactment of this
Act, the Securities and Exchange Commission, the Commodity
Futures Trading Commission, and the prudential regulators
shall submit to the appropriate committees of Congress
recommendations for legislative changes to the Federal laws
to facilitate the portfolio margining of securities and
commodity futures and options, commodity options, swaps, and
other financial instrument positions.

SEC. 714. ABUSIVE SWAPS.

The Commodity Futures Trading Commission or the Securities
and Exchange Commission, or both, individually may, by rule
or order--

[[Page S2869]]

(1) collect information as may be necessary concerning the
markets for any types of--
(A) swap (as defined in section 1a of the Commodity
Exchange Act (7 U.S.C. 1a)); or
(B) security-based swap (as defined in section 1a of the
Commodity Exchange Act (7 U.S.C. 1a)); and
(2) issue a report with respect to any types of swaps or
security-based swaps that the Commodity Futures Trading
Commission or the Securities and Exchange Commission
determines to be detrimental to--
(A) the stability of a financial market; or
(B) participants in a financial market.

SEC. 715. AUTHORITY TO PROHIBIT PARTICIPATION IN SWAP
ACTIVITIES.

Except as provided in section 4 of the Commodity Exchange
Act (7 U.S.C. 6) (as amended by section 738), if the
Commodity Futures Trading Commission or the Securities and
Exchange Commission determines that the regulation of swaps
or security-based swaps markets in a foreign country
undermines the stability of the United States financial
system, either Commission, in consultation with the Secretary
of the Treasury, may prohibit an entity domiciled in the
foreign country from participating in the United States in
any swap or security-based swap activities.

SEC. 716. PROHIBITION AGAINST FEDERAL GOVERNMENT BAILOUTS OF
SWAPS ENTITIES.

(a) Prohibition on Federal Assistance.--Notwithstanding any
other provision of law (including regulations), no Federal
assistance may be provided to any swaps entity with respect
to any swap, security-based swap, or other activity of the
swaps entity.
(b) Definitions.--In this section:
(1) Federal assistance.--The term ``Federal assistance''
means the use of any funds, including advances from any
Federal Reserve credit facility, discount window, or pursuant
to the third undesignated paragraph of section 13 of the
Federal Reserve Act (12 U.S.C. 343) (relating to emergency
lending authority), Federal Deposit Insurance Corporation
insurance, or guarantees for the purpose of--
(A) making any loan to, or purchasing any stock, equity
interest, or debt obligation of, any swaps entity;
(B) purchasing the assets of any swaps entity;
(C) guaranteeing any loan or debt issuance of any swaps
entity; or
(D) entering into any assistance arrangement (including tax
breaks), loss sharing, or profit sharing with any swaps
entity.
(2) Swaps entity.--The term ``swaps entity'' means any swap
dealer, security-based swap dealer, major swap participant,
major security-based swap participant, swap execution
facility, designated contract market, national securities
exchange, central counterparty, clearing house, clearing
agency, or derivatives clearing organization that is
registered under--
(A) the Commodity Exchange Act (7 U.S.C. 1 et seq.);
(B) the Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.); or
(C) any other Federal or State law (including regulations).

SEC. 717. NEW PRODUCT APPROVAL--CFTC-SEC PROCESS.

(a) Amendments to the Commodity Exchange Act.--Section
2(a)(1)(C) of the Commodity Exchange Act (7 U.S.C.
2(a)(1)(C)) is amended--
(1) in clause (i) by striking ``This'' and inserting ``(I)
Except as provided in subclause (II), this''; and
(2) by adding at the end of clause (i) the following:

``(II) This Act shall apply to and the Commission shall
have jurisdiction with respect to accounts, agreements, and
transactions involving, and may permit the listing for
trading pursuant to section 5c(c) of, a put, call, or other
option on 1 or more securities (as defined in section 2(a)(1)
of the Securities Act of 1933 or section 3(a)(10) of the
Securities Exchange Act of 1934 on the date of enactment of
the Futures Trading Act of 1982), including any group or
index of such securities, or any interest therein or based on
the value thereof, that is exempted by the Securities and
Exchange Commission pursuant to section 36(a)(1) of the
Securities Exchange Act of 1934 with the condition that the
Commission exercise concurrent jurisdiction over such put,
call, or other option; provided, however, that nothing in
this paragraph shall be construed to affect the jurisdiction
and authority of the Securities and Exchange Commission over
such put, call, or other option.''.

(b) Amendment to the Securities Exchange Act of 1934.--The
Securities Exchange Act of 1934 is amended by adding the
following section after section 3A (15 U.S.C. 78c-1):

``SEC. 3B. SECURITIES-RELATED DERIVATIVES.

``(a) Any agreement, contract, or transaction (or class
thereof) that is exempted by the Commodity Futures Trading
Commission pursuant to section 4(c)(1) of the Commodity
Exchange Act (7 U.S.C. 6(c)(1)) with the condition that the
Commission exercise concurrent jurisdiction over such
agreement, contract, or transaction (or class thereof) shall
be deemed a security for purposes of the securities laws.
``(b) With respect to any agreement, contract, or
transaction (or class thereof) that is exempted by the
Commodity Futures Trading Commission pursuant to section
4(c)(1) of the Commodity Exchange Act (7 U.S.C. 6(c)(1)) with
the condition that the Commission exercise concurrent
jurisdiction over such agreement, contract, or transaction
(or class thereof), references in the securities laws to the
`purchase' or `sale' of a security shall be deemed to include
the execution, termination (prior to its scheduled maturity
date), assignment, exchange, or similar transfer or
conveyance of, or extinguishing of rights or obligations
under such agreement, contract, or transaction, as the
context may require.''.
(c) Amendment to Securities Exchange Act of 1934.--Section
19(b) of the Securities Exchange Act of 1934 (15 U.S.C.
78s(b)) is amended by adding at the end the following:
``(10) Notwithstanding the provisions of paragraph (2), the
time period within which the Commission is required by order
to approve a proposed rule change or institute proceedings to
determine whether the proposed rule change should be
disapproved is stayed pending a determination by the
Commission upon the request of the Commodity Futures Trading
Commission or its Chairman that the Commission issue a
determination as to whether a product that is the subject of
such proposed rule change is a security pursuant to section
718 of the Wall Street Transparency and Accountability Act of
2010.''.
(d) Amendment to Commodity Exchange Act.--Section 5c(c)(1)
of the Commodity Exchange Act (7 U.S.C. 7a-2(c)(1)) is
amended--
(1) by striking ``Subject to paragraph (2)'' and inserting
the following:
``(A) Election.--Subject to paragraph (2)''; and
(2) by adding at the end the following:
``(B) Certification.--The certification of a product
pursuant to this paragraph shall be stayed pending a
determination by the Commission upon the request of the
Securities and Exchange Commission or its Chairman that the
Commission issue a determination as to whether the product
that is the subject of such certification is a contract of
sale of a commodity for future delivery, an option on such a
contract, or an option on a commodity pursuant to section 718
of the Wall Street Transparency and Accountability Act of
2010.''.

SEC. 718. DETERMINING STATUS OF NOVEL DERIVATIVE PRODUCTS.

(a) Process for Determining the Status of a Novel
Derivative Product.--
(1) Notice.--
(A) In general.--Any person filing a proposal to list or
trade a novel derivative product that may have elements of
both securities and contracts of sale of a commodity for
future delivery (or options on such contracts or options on
commodities) may concurrently provide notice and furnish a
copy of such filing with both the Securities and Exchange
Commission and the Commodity Futures Trading Commission. Any
such notice shall state that notice has been made with both
Commissions.
(B) Notification.--If no concurrent notice is made pursuant
to subparagraph (A), within 5 business days after determining
that a proposal that seeks to list or trade a novel
derivative product may have elements of both securities and
contracts of sale of a commodity for future delivery (or
options on such contracts or options on commodities), the
Securities and Exchange Commission or the Commodity Futures
Trading Commission, as applicable, shall notify the other
Commission and provide a copy of such filing to the other
Commission.
(2) Request for determination.--
(A) In general.--No later than 21 days after receipt of a
notice under paragraph (1), or upon its own initiative if no
such notice is received, the Commodity Futures Trading
Commission may request that the Securities and Exchange
Commission issue a determination as to whether a product is a
security, as defined in section 3(a)(10) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(10)).
(B) Request.--No later than 21 days after receipt of a
notice under paragraph (1), or upon its own initiative if no
such notice is received, the Securities and Exchange
Commission may request that the Commodity Futures Trading
Commission issue a determination as to whether a product is a
contract of sale of a commodity for future delivery, an
option on such a contract, or an option on a commodity
subject to the Commodity Futures Trading Commission's
exclusive jurisdiction under section 2(a)(1)(A) of the
Commodity Exchange Act (7 U.S.C. 2(a)(1)(A)).
(C) Requirement relating to request.--A request under
subparagraph (A) or (B) shall be made by submitting such
request, in writing, to the Securities and Exchange
Commission or the Commodity Futures Trading Commission, as
applicable.
(D) Effect.--Nothing in this paragraph shall be construed
to prevent--
(i) the Commodity Futures Trading Commission from
requesting that the Securities and Exchange Commission grant
an exemption pursuant to section 36(a)(1) of the Securities
Exchange Act of 1934 (15 U.S.C. 78mm(a)(1)) with respect to a
product that is the subject of a filing under paragraph (1);
or
(ii) the Securities and Exchange Commission from requesting
that the Commodity Futures Trading Commission grant an
exemption pursuant to section 4(c)(1) of the Commodity
Exchange Act (7 U.S.C. 6(c)(1)) with respect to a product
that is the subject of a filing under paragraph (1).

Provided, however, that nothing in this subparagraph shall be
construed to require the Commodity Futures Trading Commission
or

[[Page S2870]]

the Securities and Exchange Commission to issue an exemption
requested pursuant to this subparagraph; provided further,
That an order granting or denying an exemption described in
this subparagraph and issued under paragraph (3)(B) shall not
be subject to judicial review pursuant to subsection (b).
(E) Withdrawal of request.--A request under subparagraph
(A) or (B) may be withdrawn by the Commission making the
request at any time prior to a determination being made
pursuant to paragraph (3) for any reason by providing written
notice to the head of the other Commission.
(3) Determination.--Notwithstanding any other provision of
law, no later than 120 days after the date of receipt of a
request--
(A) under subparagraph (A) or (B) of paragraph (2), unless
such request has been withdrawn pursuant to paragraph (2)(E),
the Securities and Exchange Commission or the Commodity
Futures Trading Commission, as applicable, shall, by order,
issue the determination requested in subparagraph (A) or (B)
of paragraph (2), as applicable, and the reasons therefore;
or
(B) under paragraph (2)(D), unless such request has been
withdrawn, the Securities and Exchange Commission or the
Commodity Futures Trading Commission, as applicable, shall
grant an exemption or provide reasons for not granting such
exemption, provided that any decision by the Securities and
Exchange Commission not to grant such exemption shall not be
reviewable under section 25 of the Securities Exchange Act of
1934 (15 U.S.C. 78y).
(b) Judicial Resolution.--
(1) In general.--The Commodity Futures Trading Commission
or the Securities and Exchange Commission may petition the
United States Court of Appeals for the District of Columbia
Circuit for review of a final order of the other Commission,
with respect to a novel derivative product that may have
elements of both securities and contracts of sale of a
commodity for future delivery (or options on such contracts
or options on commodities) that it believes affects its
statutory jurisdiction, including an order or orders issued
under subsection (a)(3)(A), by filing in such court, within
60 days after the date of entry of such order, a written
petition requesting a review of the order. Any such
proceeding shall be expedited by the Court of Appeals.
(2) Transmittal of petition and record.--A copy of a
petition described in paragraph (1) shall be transmitted not
later than 1 business day after filing by the complaining
Commission to the responding Commission. On receipt of the
petition, the responding Commission shall file with the court
a copy of the order under review and any documents referred
to therein, and any other materials prescribed by the court.
(3) Standard of review.--The court, in considering a
petition filed pursuant to paragraph (1), shall give no
deference to, or presumption in favor of, the views of either
Commission.
(4) Judicial stay.--The filing of a petition by the
complaining Commission pursuant to paragraph (1) shall
operate as a stay of the order, until the date on which the
determination of the court is final (including any appeal of
the determination).

PART II--REGULATION OF SWAP MARKETS

SEC. 721. DEFINITIONS.

(a) In General.--Section 1a of the Commodity Exchange Act
(7 U.S.C. 1a) is amended--
(1) by redesignating paragraphs (2), (3) and (4), (5)
through (17), (18) through (23), (24) through (28), (29),
(30), (31) through (33), and (34) as paragraphs (6), (8) and
(9), (11) through (23), (26) through (31), (34) through (38),
(40), (41), (44) through (46), and (51), respectively;
(2) by inserting after paragraph (1) the following:
``(2) Appropriate federal banking agency.--The term
`appropriate Federal banking agency' has the meaning given
the term in section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813).
``(3) Associated person of a security-based swap dealer or
major security-based swap participant.--The term `associated
person of a security-based swap dealer or major security-
based swap participant' has the meaning given the term in
section 3(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)).
``(4) Associated person of a swap dealer or major swap
participant.--
``(A) In general.--The term `associated person of a swap
dealer or major swap participant' means--
``(i) any partner, officer, director, or branch manager of
a swap dealer or major swap participant (including any
individual who holds a similar status or performs a similar
function with respect to any partner, officer, director, or
branch manager of a swap dealer or major swap participant);
``(ii) any person that directly or indirectly controls, is
controlled by, or is under common control with, a swap dealer
or major swap participant; and
``(iii) any employee of a swap dealer or major swap
participant.
``(B) Exclusion.--Other than for purposes of section
4s(b)(6), the term `associated person of a swap dealer or
major swap participant' does not include any person
associated with a swap dealer or major swap participant the
functions of which are solely clerical or ministerial.
``(5) Board.--The term `Board' means the Board of Governors
of the Federal Reserve System.'';
(3) by inserting after paragraph (6) (as redesignated by
paragraph (1)) the following:
``(7) Cleared swap.--The term `cleared swap' means any swap
that is, directly or indirectly, submitted to and cleared by
a derivatives clearing organization registered with the
Commission.'';
(4) in paragraph (9) (as redesignated by paragraph (1)), by
striking ``except onions'' and all that follows through the
period at the end and inserting the following: ``except
onions (as provided in section 13-1) and motion picture box
office receipts (or any index, measure, value, or data
related to such receipts), and all services, rights, and
interests (except motion picture box office receipts, or any
index, measure, value or data related to such receipts) in
which contracts for future delivery are presently or in the
future dealt in.'';
(5) by inserting after paragraph (9) (as redesignated by
paragraph (1)) the following:
``(10) Commodity pool.--
``(A) In general.--The term `commodity pool' means any
investment trust, syndicate, or similar form of enterprise
operated for the purpose of trading in commodity interests,
including any--
``(i) commodity for future delivery, security futures
product, or swap;
``(ii) agreement, contract, or transaction described in
section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
``(iii) commodity option authorized under section 4c; or
``(iv) leverage transaction authorized under section 19.
``(B) Further definition.--The Commission, by rule or
regulation, may include within, or exclude from, the term
`commodity pool' any investment trust, syndicate, or similar
form of enterprise if the Commission determines that the rule
or regulation will effectuate the purposes of this Act.'';
(6) by striking paragraph (11) (as redesignated by
paragraph (1)) and inserting the following:
``(11) Commodity pool operator.--
``(A) In general.--The term `commodity pool operator' means
any person--
``(i) engaged in a business that is of the nature of a
commodity pool, investment trust, syndicate, or similar form
of enterprise, and who, in connection therewith, solicits,
accepts, or receives from others, funds, securities, or
property, either directly or through capital contributions,
the sale of stock or other forms of securities, or otherwise,
for the purpose of trading in commodity interest, including
any--

``(I) commodity for future delivery, security futures
product, or swap;
``(II) agreement, contract, or transaction described in
section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
``(III) commodity option authorized under section 4c; or
``(IV) leverage transaction authorized under section 19; or

``(ii) who is registered with the Commission as a commodity
pool operator.
``(B) Further definition.--The Commission, by rule or
regulation, may include within, or exclude from, the term
`commodity pool operator' any person engaged in a business
that is of the nature of a commodity pool, investment trust,
syndicate, or similar form of enterprise if the Commission
determines that the rule or regulation will effectuate the
purposes of this Act.'';
(7) in paragraph (12) (as redesignated by paragraph (1)),
in subparagraph (A)--
(A) in clause (i)--
(i) in subclause (I), by striking ``made or to be made on
or subject to the rules of a contract market or derivatives
transaction execution facility'' and inserting ``, security
futures product, or swap'';
(ii) by redesignating subclauses (II) and (III) as
subclauses (III) and (IV);
(iii) by inserting after subclause (I) the following:

``(II) any agreement, contract, or transaction described in
section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i)''; and

(iv) in subclause (IV) (as so redesignated), by striking
``or'' ;
(B) in clause (ii), by striking the period at the end and
inserting a semicolon; and
(C) by adding at the end the following:
``(iii) is registered with the Commission as a commodity
trading advisor; or
``(iv) the Commission, by rule or regulation, may include
if the Commission determines that the rule or regulation will
effectuate the purposes of this Act.'';
(8) in paragraph (17) (as redesignated by paragraph (1)),
in subparagraph (A), in the matter preceding clause (i), by
striking ``paragraph (12)(A)'' and inserting ``paragraph
(18)(A)'';
(9) in paragraph (18) (as redesignated by paragraph (1))--
(A) in subparagraph (A)--
(i) in the matter following clause (vii)(III)--

(I) by striking ``section 1a (11)(A)'' and inserting
``paragraph (17)(A)''; and
(II) by striking ``$25,000,000'' and inserting
``$50,000,000''; and

(ii) in clause (xi), in the matter preceding subclause (I),
by striking ``total assets in an amount'' and inserting
``amounts invested on a discretionary basis, the aggregate of
which is'';
(10) by striking paragraph (22) (as redesignated by
paragraph (1)) and inserting the following:
``(22) Floor broker.--

[[Page S2871]]

``(A) In general.--The term `floor broker' means any
person--
``(i) who, in or surrounding any pit, ring, post, or other
place provided by a contract market for the meeting of
persons similarly engaged, shall purchase or sell for any
other person--

``(I) any commodity for future delivery, security futures
product, or swap; or
``(II) any commodity option authorized under section 4c; or

``(ii) who is registered with the Commission as a floor
broker.
``(B) Further definition.--The Commission, by rule or
regulation, may include within, or exclude from, the term
`floor broker' any person in or surrounding any pit, ring,
post, or other place provided by a contract market for the
meeting of persons similarly engaged who trades for any other
person if the Commission determines that the rule or
regulation will effectuate the purposes of this Act.'';
(11) by striking paragraph (23) (as redesignated by
paragraph (1)) and inserting the following:
``(23) Floor trader.--
``(A) In general.--The term `floor trader' means any
person--
``(i) who, in or surrounding any pit, ring, post, or other
place provided by a contract market for the meeting of
persons similarly engaged, purchases, or sells solely for
such person's own account--

``(I) any commodity for future delivery, security futures
product, or swap; or
``(II) any commodity option authorized under section 4c; or

``(ii) who is registered with the Commission as a floor
trader.
``(B) Further definition.--The Commission, by rule or
regulation, may include within, or exclude from, the term
`floor trader' any person in or surrounding any pit, ring,
post, or other place provided by a contract market for the
meeting of persons similarly engaged who trades solely for
such person's own account if the Commission determines that
the rule or regulation will effectuate the purposes of this
Act.'';
(12) by inserting after paragraph (23) (as redesignated by
paragraph (1)) the following:
``(24) Foreign exchange forward.--The term `foreign
exchange forward' means a transaction that solely involves
the exchange of 2 different currencies on a specific future
date at a fixed rate agreed upon on the inception of the
contract covering the exchange.
``(25) Foreign exchange swap.--The term `foreign exchange
swap' means a transaction that solely involves--
``(A) an exchange of 2 different currencies on a specific
date at a fixed rate that is agreed upon on the inception of
the contract covering the exchange; and
``(B) a reverse exchange of the 2 currencies described in
subparagraph (A) at a later date and at a fixed rate that is
agreed upon on the inception of the contract covering the
exchange.'';
(13) by striking paragraph (28) (as redesignated by
paragraph (1)) and inserting the following:
``(28) Futures commission merchant.--
``(A) In general.--The term `futures commission merchant'
means an individual, association, partnership, corporation,
or trust--
``(i) that--

``(I) is engaged in soliciting or in accepting orders for--

``(aa) the purchase or sale of a commodity for future
delivery;
``(bb) a security futures product;
``(cc) a swap;
``(dd) any agreement, contract, or transaction described in
section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
``(ee) any commodity option authorized under section 4c; or
``(ff) any leverage transaction authorized under section
19; or

``(II) is acting as a counterparty in any agreement,
contract, or transaction described in section 2(c)(2)(C)(i)
or section 2(c)(2)(D)(i); and
``(III) in or in connection with the activities described
in subclause (I) or (II), accepts any money, securities, or
property (or extends credit in lieu thereof) to margin,
guarantee, or secure any trades or contracts that result or
may result therefrom; or

``(ii) that is registered with the Commission as a futures
commission merchant.
``(B) Further definition.--The Commission, by rule or
regulation, may include within, or exclude from, the term
`futures commission merchant' any person who engages in
soliciting or accepting orders for, or acting as a
counterparty in, any agreement, contract, or transaction
subject to this Act, and who accepts any money, securities,
or property (or extends credit in lieu thereof) to margin,
guarantee, or secure any trades or contracts that result or
may result therefrom, if the Commission determines that the
rule or regulation will effectuate the purposes of this
Act.'';
(14) in paragraph (30) (as redesignated by paragraph (1)),
in subparagraph (B), by striking ``state'' and inserting
``State'';
(15) by striking paragraph (31) (as redesignated by
paragraph (1)) and inserting the following:
``(31) Introducing broker.--
``(A) In general.--The term `introducing broker' means any
person (except an individual who elects to be and is
registered as an associated person of a futures commission
merchant)--
``(i) who--

``(I) is engaged in soliciting or in accepting orders for--

``(aa) the purchase or sale of any commodity for future
delivery, security futures product, or swap;
``(bb) any agreement, contract, or transaction described in
section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
``(cc) any commodity option authorized under section 4c; or
``(dd) any leverage transaction authorized under section
19; and

``(II) does not accept any money, securities, or property
(or extend credit in lieu thereof) to margin, guarantee, or
secure any trades or contracts that result or may result
therefrom; or

``(ii) who is registered with the Commission as an
introducing broker.
``(B) Further definition.--The Commission, by rule or
regulation, may include within, or exclude from, the term
`introducing broker' any person who engages in soliciting or
accepting orders for any agreement, contract, or transaction
subject to this Act, and who does not accept any money,
securities, or property (or extend credit in lieu thereof) to
margin, guarantee, or secure any trades or contracts that
result or may result therefrom, if the Commission determines
that the rule or regulation will effectuate the purposes of
this Act.'';
(16) by inserting after paragraph (31) (as redesignated by
paragraph (1)) the following:
``(32) Major security-based swap participant.--The term
`major security-based swap participant' has the meaning given
the term in section 3(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)).
``(33) Major swap participant.--
``(A) In general.--The term `major swap participant' means
any person who is not a swap dealer, and--
``(i) maintains a substantial position in swaps for any of
the major swap categories as determined by the Commission,
excluding--

``(I) positions held for hedging or mitigating commercial
risk; and
``(II) positions maintained by any employee benefit plan
(or any contract held by such a plan) as defined in
paragraphs (3) and (32) of section 3 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1002) for
the primary purpose of hedging or mitigating any risk
directly associated with the operation of the plan; or

``(ii) whose outstanding swaps create substantial
counterparty exposure that could have serious adverse effects
on the financial stability of the United States banking
system or financial markets; or
``(iii)(I) is a financial entity, other than an entity
predominantly engaged in providing financing for the purchase
of an affiliate's merchandise or manufactured goods, that is
highly leveraged relative to the amount of capital it holds;
and
``(II) maintains a substantial position in outstanding
swaps in any major swap category as determined by the
Commission.
``(B) Definition of substantial position.--For purposes of
subparagraph (A), the Commission shall define by rule or
regulation the term `substantial position' at the threshold
that the Commission determines to be prudent for the
effective monitoring, management, and oversight of entities
that are systemically important or can significantly impact
the financial system of the United States.
``(C) Scope of designation.--For purposes of subparagraph
(A), a person may be designated as a major swap participant
for 1 or more categories of swaps without being classified as
a major swap participant for all classes of swaps.
``(D) Capital.--In setting capital requirements for a
person that is designated as a major swap participant for a
single type or single class or category of swaps or
activities, the prudential regulator and the Commission shall
take into account the risks associated with other types of
swaps or classes of swaps or categories of swaps engaged in
and the other activities conducted by that person that are
not otherwise subject to regulation applicable to that person
by virtue of the status of the person as a major swap
participant.'';
(17) by inserting after paragraph (38) (as redesignated by
paragraph (1)) the following:
``(39) Prudential regulator.--The term `prudential
regulator' means--
``(A) the Office of the Comptroller of the Currency, in the
case of--
``(i) any national banking association;
``(ii) any Federal branch or agency of a foreign bank; or
``(iii) any Federal savings association;
``(B) the Federal Deposit Insurance Corporation, in the
case of--
``(i) any insured State bank;
``(ii) any foreign bank having an insured branch; or
``(iii) any State savings association;
``(C) the Board of Governors of the Federal Reserve System,
in the case of--
``(i) any noninsured State member bank;
``(ii) any branch or agency of a foreign bank with respect
to any provision of the Federal Reserve Act (12 U.S.C. 221 et
seq.) which is made applicable under the International
Banking Act of 1978 (12 U.S.C. 3101 et seq.);
``(iii) any foreign bank which does not operate an insured
branch;

[[Page S2872]]

``(iv) any agency or commercial lending company other than
a Federal agency; or
``(v) 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 (12 U.S.C.
3105(c)(1)), including such proceedings under the Financial
Institutions Supervisory Act of 1966 (12 U.S.C. 1464 et
seq.); and
``(D) the Farm Credit Administration, in the case of a swap
dealer, major swap participant, security-based swap dealer,
or major security-based swap participant that is an
institution chartered under the Farm Credit Act of 1971 (12
U.S.C. 2001 et seq.).'';
(18) in paragraph (40) (as redesignated by paragraph (1))--
(A) by striking subparagraph (B);
(B) by redesignating subparagraphs (C), (D), and (E) as
subparagraphs (B), (C), and (F), respectively;
(C) in subparagraph (C) (as so redesignated), by striking
``and'';
(D) by inserting after subparagraph (C) (as so
redesignated) the following:
``(D) a swap execution facility registered under section
5h;
``(E) a swap data repository; and'';
(19) by inserting after paragraph (41) (as redesignated by
paragraph (1)) the following:
``(42) Security-based swap.--The term `security-based swap'
has the meaning given the term in section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
``(43) Security-based swap dealer.--The term `security-
based swap dealer' has the meaning given the term in section
3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)).'';
(20) in paragraph (46) (as redesignated by paragraph (1)),
by striking ``subject to section 2(h)(7)'' and inserting
``subject to section 2(h)(5)'';
(21) by inserting after paragraph (46) (as redesignated by
paragraph (1)) the following:
``(47) Swap.--
``(A) In general.--Except as provided in subparagraph (B),
the term `swap' means any agreement, contract, or
transaction--
``(i) that is a put, call, cap, floor, collar, or similar
option of any kind that is for the purchase or sale, or based
on the value, of 1 or more interest or other rates,
currencies, commodities, securities, instruments of
indebtedness, indices, quantitative measures, or other
financial or economic interests or property of any kind;
``(ii) that provides for any purchase, sale, payment, or
delivery (other than a dividend on an equity security) that
is dependent on the occurrence, nonoccurrence, or the extent
of the occurrence of an event or contingency associated with
a potential financial, economic, or commercial consequence;
``(iii) that provides on an executory basis for the
exchange, on a fixed or contingent basis, of 1 or more
payments based on the value or level of 1 or more interest or
other rates, currencies, commodities, securities, instruments
of indebtedness, indices, quantitative measures, or other
financial or economic interests or property of any kind, or
any interest therein or based on the value thereof, and that
transfers, as between the parties to the transaction, in
whole or in part, the financial risk associated with a future
change in any such value or level without also conveying a
current or future direct or indirect ownership interest in an
asset (including any enterprise or investment pool) or
liability that incorporates the financial risk so
transferred, including any agreement, contract, or
transaction commonly known as--

``(I) an interest rate swap;
``(II) a rate floor;
``(III) a rate cap;
``(IV) a rate collar;
``(V) a cross-currency rate swap;
``(VI) a basis swap;
``(VII) a currency swap;
``(VIII) a foreign exchange swap;
``(IX) a total return swap;
``(X) an equity index swap;
``(XI) an equity swap;
``(XII) a debt index swap;
``(XIII) a debt swap;
``(XIV) a credit spread;
``(XV) a credit default swap;
``(XVI) a credit swap;
``(XVII) a weather swap;
``(XVIII) an energy swap;
``(XIX) a metal swap;
``(XX) an agricultural swap;
``(XXI) an emissions swap; and
``(XXII) a commodity swap;

``(iv) that is an agreement, contract, or transaction that
is, or in the future becomes commonly known to the trade as a
swap;
``(v) including any security-based swap agreement which
meets the definition of `swap agreement' as defined in
section 206A of the Gramm-Leach-Bliley Act (15 U.S.C. 78c
note) of which a material term is based on the price, yield,
value, or volatility of any security or any group or index of
securities, or any interest therein; or
``(vi) that is any combination or permutation of, or option
on, any agreement, contract, or transaction described in any
of clauses (i) through (v).
``(B) Exclusions.--The term `swap' does not include--
``(i) any contract of sale of a commodity for future
delivery (or option on such a contract), leverage contract
authorized under section 19, security futures product, or
agreement, contract, or transaction described in section
2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
``(ii) any sale of a nonfinancial commodity or security for
deferred shipment or delivery, so long as the transaction is
intended to be physically settled;
``(iii) any put, call, straddle, option, or privilege on
any security, certificate of deposit, or group or index of
securities, including any interest therein or based on the
value thereof, that is subject to--

``(I) the Securities Act of 1933 (15 U.S.C. 77a et seq.);
and
``(II) the Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.);

``(iv) any put, call, straddle, option, or privilege
relating to a foreign currency entered into on a national
securities exchange registered pursuant to section 6(a) of
the Securities Exchange Act of 1934 (15 U.S.C. 78f(a));
``(v) any agreement, contract, or transaction providing for
the purchase or sale of 1 or more securities on a fixed basis
that is subject to--

``(I) the Securities Act of 1933 (15 U.S.C. 77a et seq.);
and
``(II) the Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.);

``(vi) any agreement, contract, or transaction providing
for the purchase or sale of 1 or more securities on a
contingent basis that is subject to the Securities Act of
1933 (15 U.S.C. 77a et seq.) and the Securities Exchange Act
of 1934 (15 U.S.C. 78a et seq.), unless the agreement,
contract, or transaction predicates the purchase or sale on
the occurrence of a bona fide contingency that might
reasonably be expected to affect or be affected by the
creditworthiness of a party other than a party to the
agreement, contract, or transaction;
``(vii) any note, bond, or evidence of indebtedness that is
a security, as defined in section 2(a) of the Securities Act
of 1933 (15 U.S.C. 77b(a));
``(viii) any agreement, contract, or transaction that is--

``(I) based on a security; and
``(II) entered into directly or through an underwriter (as
defined in section 2(a) of the Securities Act of 1933 (15
U.S.C. 77b(a))) by the issuer of such security for the
purposes of raising capital, unless the agreement, contract,
or transaction is entered into to manage a risk associated
with capital raising;

``(ix) any agreement, contract, or transaction a
counterparty of which is a Federal Reserve bank, the Federal
Government, or a Federal agency that is expressly backed by
the full faith and credit of the United States; and
``(x) any security-based swap, other than a security-based
swap as described in subparagraph (D).
``(C) Rule of construction regarding master agreements.--
``(i) In general.--Except as provided in clause (ii), the
term `swap' includes a master agreement that provides for an
agreement, contract, or transaction that is a swap under
subparagraph (A), together with each supplement to any master
agreement, without regard to whether the master agreement
contains an agreement, contract, or transaction that is not a
swap pursuant to subparagraph (A).
``(ii) Exception.--For purposes of clause (i), the master
agreement shall be considered to be a swap only with respect
to each agreement, contract, or transaction covered by the
master agreement that is a swap pursuant to subparagraph (A).
``(D) Mixed swap.--The term `security-based swap' includes
any agreement, contract, or transaction that is as described
in section 3(a)(68)(A) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)(68)(A)) and also is based on the value of 1
or more interest or other rates, currencies, commodities,
instruments of indebtedness, indices, quantitative measures,
other financial or economic interest or property of any kind
(other than a single security or a narrow-based security
index), or the occurrence, non-occurrence, or the extent of
the occurrence of an event or contingency associated with a
potential financial, economic, or commercial consequence
(other than an event described in subparagraph (A)(iii)).
``(E) Treatment of foreign exchange swaps and forwards.--
``(i) In general.--Foreign exchange swaps and foreign
exchange forwards shall be considered swaps under this
paragraph unless the Secretary makes a written determination
that either foreign exchange swaps or foreign exchange
forwards or both--

``(I) should be not be regulated as swaps under this Act;
and

``(II) are not structured to evade the Wall Street
Transparency and Accountability Act of 2010 in violation of
any rule promulgated by the Commission pursuant to section
111(c) of that Act.

``(ii) Congressional notice; effectiveness.--The Secretary
shall submit any written determination under clause (i) to
the appropriate committees of Congress, including the
Committee on Agriculture, Nutrition, and Forestry of the
Senate and the Committee on Agriculture of the House of
Representatives. Any such written determination by the
Secretary shall not be effective until it is submitted to the
appropriate committees of Congress.
``(iii) Reporting.--Notwithstanding a written determination
by the Secretary under clause (i), all foreign exchange swaps
and foreign exchange forwards shall be reported to either a
swap data repository, or, if there is no swap data repository
that would accept such swaps or forwards, to the Commission
pursuant to section 4r within such time period as the
Commission may by rule or regulation prescribe.

[[Page S2873]]

``(iv) Business standards.--Notwithstanding clauses (ix)
and (x) of subparagraph (B) and clause (ii), any party to a
foreign exchange swap or forward that is a swap dealer or
major swap participant shall conform to the business conduct
standards contained in section 4s(h).
``(v) Secretary.--For purposes of this subparagraph only,
the term `Secretary' means the Secretary of the Treasury.
``(F) Exception for certain foreign exchange swaps and
forwards.--
``(i) Registered entities.--Any foreign exchange swap and
any foreign exchange forward that is listed and traded on or
subject to the rules of a designated contract market or a
swap execution facility, or that is cleared by a derivatives
clearing organization shall not be exempt from any provision
of this Act or amendments made by the Wall Street
Transparency and Accountability Act of 2010 prohibiting fraud
or manipulation.
``(ii) Retail transactions.--Nothing in subparagraph (E)
shall affect, or be construed to affect, the applicability of
this Act or the jurisdiction of the Commission with respect
to agreements, contracts, or transactions in foreign currency
pursuant to section 2(c)(2).
``(48) Swap data repository.--The term `swap data
repository' means any person that collects, calculates,
prepares, or maintains information or records with respect to
transactions or positions in, or the terms and conditions of,
swaps entered into by third parties.
``(49) Swap dealer.--
``(A) In general.--The term `swap dealer' means any person
who--
``(i) holds itself out as a dealer in swaps;
``(ii) makes a market in swaps;
``(iii) regularly engages in the purchase and sale of swaps
in the ordinary course of business; or
``(iv) engages in any activity causing the person to be
commonly known in the trade as a dealer or market maker in
swaps.
``(B) Inclusion.--A person may be designated as a swap
dealer for a single type or single class or category of swap
or activities and considered not to be a swap dealer for
other types, classes, or categories of swaps or activities.
``(C) Capital.--In setting capital requirements for a
person that is designated as a swap dealer for a single type
or single class or category of swap or activities, the
prudential regulator and the Commission shall take into
account the risks associated with other types of swaps or
classes of swaps or categories of swaps engaged in and the
other activities conducted by that person that are not
otherwise subject to regulation applicable to that person by
virtue of the status of the person as a swap dealer.
``(D) Exception.--The term `swap dealer' does not include a
person that buys or sells swaps for such person's own
account, either individually or in a fiduciary capacity, but
not as a part of a regular business.
``(50) Swap execution facility.--The term `swap execution
facility' means a facility in which multiple participants
have the ability to execute or trade swaps by accepting bids
and offers made by other participants that are open to
multiple participants in the facility or system, through any
means of interstate commerce, including any trading facility,
that--
``(A) facilitates the execution of swaps between persons;
and
``(B) is not a designated contract market.''; and
(22) in paragraph (51) (as redesignated by paragraph (1)),
in subparagraph (A)(i), by striking ``partipants'' and
inserting ``participants''.
(b) Authority to Define Terms.--The Commodity Futures
Trading Commission may adopt a rule to define--
(1) the term ``commercial risk''; and
(2) any other term included in an amendment to the
Commodity Exchange Act (7 U.S.C. 1 et seq.) made by this
subtitle.
(c) Modification of Definitions.--To include transactions
and entities that have been structured to evade this subtitle
(or an amendment made by this subtitle), the Commodity
Futures Trading Commission shall adopt a rule to further
define the terms ``swap'', ``swap dealer'', ``major swap
participant'', and ``eligible contract participant''.
(d) Exemptions.--Section 4(c)(1) of the Commodity Exchange
Act (7 U.S.C. 6(c)(1)) is amended by striking ``except that''
and all that follows through the period at the end and
inserting the following: ``except that--
``(A) unless the Commission is expressly authorized by any
provision described in this subparagraph to grant exemptions,
with respect to amendments made by subtitle A of the Wall
Street Transparency and Accountability Act of 2010--
``(i) with respect to--

``(I) paragraphs (2), (3), (4), (5), and (7), clause
(vii)(III) of paragraph (17), paragraphs (23), (24), (31),
(32), (38), (39), (41), (42), (46), (47), (48), and (49) of
section 1a, and sections 2(a)(13), 2(c)(D), 4a(a), 4a(b),
4d(c), 4d(d), 4r, 4s, 5b(a), 5b(b), 5(d), 5(g), 5(h), 5b(c),
5b(i), 8e, and 21; and
``(II) section 206(e) of the Gramm-Leach-Bliley Act (Public
Law 106-102; 15 U.S.C. 78c note); and

``(ii) in subsection (c) of section 111 and section 132;
and
``(B) the Commission and the Securities and Exchange
Commission may by rule, regulation, or order jointly exclude
any agreement, contract, or transaction from section
2(a)(1)(D)) if the Commission determines that the exemption
would be consistent with the public interest.''.
(e) Conforming Amendments.--
(1) Section 2(c)(2)(B)(i)(II) of the Commodity Exchange Act
(7 U.S.C. 2(c)(2)(B)(i)(II)) is amended--
(A) in item (cc)--
(i) in subitem (AA), by striking ``section 1a(20)'' and
inserting ``section 1a''; and
(ii) in subitem (BB), by striking ``section 1a(20)'' and
inserting ``section 1a''; and
(B) in item (dd), by striking ``section 1a(12)(A)(ii)'' and
inserting ``section 1a(18)(A)(ii)''.
(2) Section 4m(3) of the Commodity Exchange Act (7 U.S.C.
6m(3)) is amended by striking ``section 1a(6)'' and inserting
``section 1a''.
(3) Section 4q(a)(1) of the Commodity Exchange Act (7
U.S.C. 6o-1(a)(1)) is amended by striking ``section 1a(4)''
and inserting ``section 1a(9)''.
(4) Section 5(e)(1) of the Commodity Exchange Act (7 U.S.C.
7(e)(1)) is amended by striking ``section 1a(4)'' and
inserting ``section 1a(9)''.
(5) Section 5a(b)(2)(F) of the Commodity Exchange Act (7
U.S.C. 7a(b)(2)(F)) is amended by striking ``section 1a(4)''
and inserting ``section 1a(9)''.
(6) Section 5b(a) of the Commodity Exchange Act (7 U.S.C.
7a-1(a)) is amended, in the matter preceding paragraph (1),
by striking ``section 1a(9)'' and inserting ``section 1a''.
(7) Section 5c(c)(2)(B) of the Commodity Exchange Act (7
U.S.C. 7a-2(c)(2)(B)) is amended by striking ``section
1a(4)'' and inserting ``section 1a(9)''.
(8) Section 6(g)(5)(B)(i) of the Securities Exchange Act of
1934 (15 U.S.C. 78f(g)(5)(B)(i)) is amended--
(A) in subclause (I), by striking ``section 1a(12)(B)(ii)''
and inserting ``section 1a(18)(B)(ii)''; and
(B) in subclause (II), by striking ``section 1a(12)'' and
inserting ``section 1a(18)''.
(9) The Legal Certainty for Bank Products Act of 2000 (7
U.S.C. 27 et seq.) is amended--
(A) in section 402--
(i) in subsection (a)(7), by striking ``section 1a(20)''
and inserting ``section 1a'';
(ii) in subsection (b)(2), by striking ``section 1a(12)''
and inserting ``section 1a'';
(iii) in subsection (c), by striking ``section 1a(4)'' and
inserting ``section 1a''; and
(iv) in subsection (d)--

(I) in the matter preceding paragraph (1), by striking
``section 1a(4)'' and inserting ``section 1a(9)'';
(II) in paragraph (1)--

(aa) in subparagraph (A), by striking ``section 1a(12)''
and inserting ``section 1a''; and
(bb) in subparagraph (B), by striking ``section 1a(33)''
and inserting ``section 1a'';

(III) in paragraph (2)--

(aa) in subparagraph (A), by striking ``section 1a(10)''
and inserting ``section 1a'';
(bb) in subparagraph (B), by striking ``section
1a(12)(B)(ii)'' and inserting ``section 1a(18)(B)(ii)'';
(cc) in subparagraph (C), by striking ``section 1a(12)''
and inserting ``section 1a(18)''; and
(dd) in subparagraph (D), by striking ``section 1a(13)''
and inserting ``section 1a''; and
(B) in section 404(1), by striking ``section 1a(4)'' and
inserting ``section 1a''.

SEC. 722. JURISDICTION.

(a) Exclusive Jurisdiction.--Section 2(a)(1)(A) of the
Commodity Exchange Act (7 U.S.C. 2(a)(1)(A)) is amended in
the first sentence--
(1) by inserting ``the Wall Street Transparency and
Accountability Act of 2010 (including an amendment made by
that Act) and'' after ``otherwise provided in'';
(2) by striking ``(c) through (i) of this section'' and
inserting ``(c) and (f)'';
(3) by striking ``contracts of sale'' and inserting ``swaps
or contracts of sale''; and
(4) by striking ``or derivatives transaction execution
facility registered pursuant to section 5 or 5a'' and
inserting ``pursuant to section 5''.
(b) Regulation of Swaps Under Federal and State Law.--
Section 12 of the Commodity Exchange Act (7 U.S.C. 16) is
amended by adding at the end the following:
``(h) Regulation of Swaps as Insurance Under State Law.--A
swap--
``(1) shall not be considered to be insurance; and
``(2) may not be regulated as an insurance contract under
the law of any State.''.
(c) Agreements, Contracts, and Transactions Traded on an
Organized Exchange.--Section 2(c)(2)(A) of the Commodity
Exchange Act (7 U.S.C. 2(c)(2)(A)) is amended--
(1) in clause (i), by striking ``or'' at the end;
(2) by redesignating clause (ii) as clause (iii); and
(3) by inserting after clause (i) the following:
``(ii) a swap; or''.
(d) Applicability.--Section 2 of the Commodity Exchange Act
(7 U.S.C. 2) (as amended by section 723(a)(3)) is amended by
adding at the end the following:
``(i) Applicability.--The provisions of this Act relating
to swaps that were enacted by the Wall Street Transparency
and Accountability Act of 2010 (including any rule prescribed
or regulation promulgated under that Act), shall not apply to
activities outside the United States unless those
activities--

[[Page S2874]]

``(1) have a direct and significant connection with
activities in, or effect on, commerce of the United States;
or
``(2) contravene such rules or regulations as the
Commission may prescribe or promulgate as are necessary or
appropriate to prevent the evasion of any provision of this
Act that was enacted by the Wall Street Transparency and
Accountability Act of 2010.''.

SEC. 723. CLEARING.

(a) Clearing Requirement.--
(1) In general.--Section 2 of the Commodity Exchange Act (7
U.S.C. 2) is amended--
(A) by striking subsections (d), (e), (g), and (h); and
(B) by redesignating subsection (i) as subsection (g).
(2) Swaps; limitation on participation.--Section 2 of the
Commodity Exchange Act (7 U.S.C. 2) (as amended by paragraph
(1)) is amended by inserting after subsection (c) the
following:
``(d) Swaps.--Nothing in this Act (other than subparagraphs
(A), (B), (C), and (D) of subsection (a)(1), subsections (f)
and (g), sections 1a, 2(c)(2)(A)(ii), 2(e), 2(h), 4(c), 4a,
4b, and 4b-1, subsections (a), (b), and (g) of section 4c,
sections 4d, 4e, 4f, 4g, 4h, 4i, 4j, 4k, 4l, 4m, 4n, 4o, 4p,
4r, 4s, 4t, 5, 5b, 5c, 5e, and 5h, subsections (c) and (d) of
section 6, sections 6c, 6d, 8, 8a, and 9, subsections (e)(2)
and (f) of section 12, subsections (a) and (b) of section 13,
sections 17, 20, 21, and 22(a)(4), and any other provision of
this Act that is applicable to registered entities and
Commission registrants) governs or applies to a swap.
``(e) Limitation on Participation.--It shall be unlawful
for any person, other than an eligible contract participant,
to enter into a swap unless the swap is entered into on, or
subject to the rules of, a board of trade designated as a
contract market under section 5.''.
(3) Mandatory clearing of swaps.--Section 2 of the
Commodity Exchange Act (7 U.S.C. 2) is amended by inserting
after subsection (g) (as redesignated by paragraph (1)(B))
the following:
``(h) Clearing Requirement.--
``(1) Submission.--
``(A) In general.--Except as provided in paragraphs (9) and
(10), any person who is a party to a swap shall submit such
swap for clearing to a derivatives clearing organization that
is registered under this Act or a derivatives clearing
organization that is exempt from registration under section
5b(j) of this Act.
``(B) Open access.--The rules of a registered derivatives
clearing organization shall--
``(i) prescribe that all swaps with the same terms and
conditions are economically equivalent and may be offset with
each other within the derivatives clearing organization; and
``(ii) provide for nondiscriminatory clearing of a swap
executed bilaterally or on or through the rules of an
unaffiliated designated contract market or swap execution
facility, subject to the requirements of section 5(b).
``(2) Commission approval.--
``(A) In general.--A derivatives clearing organization
shall submit to the Commission for prior approval any group,
category, type, or class of swaps that the derivatives
clearing organization seeks to accept for clearing, which
submission the Commission shall make available to the public.
``(B) Deadline.--The Commission shall take final action on
a request submitted pursuant to subparagraph (A) not later
than 90 days after submission of the request, unless the
derivatives clearing organization submitting the request
agrees to an extension of the time limitation established
under this subparagraph.
``(C) Approval.--The Commission shall approve,
unconditionally or subject to such terms and conditions as
the Commission determines to be appropriate, any request
submitted pursuant to subparagraph (A) if the Commission
finds that the request is consistent with section 5b(c)(2).
The Commission shall not approve any such request if the
Commission does not make such finding.
``(D) Rules.--The Commission shall adopt rules for a
derivatives clearing organization's submission for approval,
pursuant to this paragraph, of any group, category, type, or
class of swaps that the derivative clearing organization
seeks to accept for clearing.
``(3) Stay of clearing requirement.--At any time after
issuance of an approval pursuant to paragraph (2):
``(A) Review process.--The Commission, on application of a
counterparty to a swap or on its own initiative, may stay the
clearing requirement of paragraph (1) until the Commission
completes a review of the terms of the swap, or the group,
category, type, or class of swaps, and the clearing
arrangement.
``(B) Deadline.--The Commission shall complete a review
undertaken pursuant to subparagraph (A) not later than 90
days after issuance of the stay, unless the derivatives
clearing organization that clears the swap, or the group,
category, type, or class of swaps, agrees to an extension of
the time limitation established under this subparagraph.
``(C) Determination.--Upon completion of the review
undertaken pursuant to subparagraph (A)--
``(i) the Commission may determine, unconditionally or
subject to such terms and conditions as the Commission
determines to be appropriate, that the swap, or the group,
category, type, or class of swaps, must be cleared pursuant
to this subsection if the Commission finds that such
clearing--

``(I) is consistent with section 5b(c)(2); and
``(II) is otherwise in the public interest, for the
protection of investors, and consistent with the purposes of
this Act;

``(ii) the Commission may determine that the clearing
requirement of paragraph (1) shall not apply to the swap, or
the group, category, type, or class of swaps; or
``(iii) if a determination is made that the clearing
requirement of paragraph (1) shall no longer apply, then it
shall still be permissible to clear such swap, or the group,
category, type, or class of swaps.
``(D) Rules.--The Commission shall adopt rules for
reviewing, pursuant to this paragraph, a derivatives clearing
organization's clearing of a swap, or a group, category,
type, or class of swaps that the Commission has accepted for
clearing.
``(4) Swaps required to be accepted for clearing.--
``(A) Rulemaking.--The Commission shall adopt rules to
further identify any group, category, type, or class of swaps
not submitted for approval under paragraph (2) that the
Commission deems should be accepted for clearing. In adopting
such rules, the Commission shall take into account the
following factors:
``(i) The extent to which any of the terms of the group,
category, type, or class of swaps, including price, are
disseminated to third parties or are referenced in other
agreements, contracts, or transactions.
``(ii) The volume of transactions in the group, category,
type, or class of swaps.
``(iii) The extent to which the terms of the group,
category, type, or class of swaps are similar to the terms of
other agreements, contracts, or transactions that are
cleared.
``(iv) Whether any differences in the terms of the group,
category, type, or class of swaps, compared to other
agreements, contracts, or transactions that are cleared, are
of economic significance.
``(v) Whether a derivatives clearing organization is
prepared to clear the group, category, type, or class of
swaps and such derivatives clearing organization has in place
effective risk management systems.
``(vi) Any other factors the Commission determine to be
appropriate.
``(B) Other designations.--At any time after the adoption
of the rules required under subparagraph (A), the Commission
may separately designate a particular swap or class of swaps
as subject to the clearing requirement in paragraph (1),
taking into account the factors described in clauses (i)
through (vi) of subparagraph (A) and the rules adopted under
such subparagraph.
``(C) In general.--In accordance with subparagraph (A), the
Commission shall, consistent with the public interest, adopt
rules under the expedited process described in subparagraph
(D) to establish criteria for determining that a swap, or any
group, category, type, or class of swap is required to be
cleared.
``(D) Expedited rulemaking authority.--
``(i) Procedure.--The promulgation of regulations under
subparagraph (A) may be made without regard to--

``(I) the notice and comment provisions of section 553 of
title 5, United States Code; and
``(II) chapter 35 of title 44, United States Code (commonly
known as the `Paperwork Reduction Act').

``(ii) Agency rulemaking.--In carrying out subparagraph
(A), the Commission shall use the authority provided under
section 808 of title 5, United States Code.
``(5) Prevention of evasion.--
``(A) In general.--The Commission may prescribe rules under
this subsection (and issue interpretations of rules
prescribed under this subsection) as determined by the
Commission to be necessary to prevent evasions of the
mandatory clearing requirements under this Act.
``(B) Duty of commission to investigate and take certain
actions.--To the extent the Commission finds that a
particular swap, group, category, type, or class of swaps
would otherwise be subject to mandatory clearing but no
derivatives clearing organization has listed the swap, group,
category, type, or class of swaps for clearing, the
Commission shall--
``(i) investigate the relevant facts and circumstances;
``(ii) within 30 days issue a public report containing the
results of the investigation; and
``(iii) take such actions as the Commission determines to
be necessary and in the public interest, which may include
requiring the retaining of adequate margin or capital by
parties to the swap, group, category, type, or class of
swaps.
``(C) Effect on authority.--Nothing in this paragraph
shall--
``(i) authorize the Commission to require a derivatives
clearing organization to list for clearing a swap, group,
category, type, or class of swaps if the clearing of the
swap, group, category, type, or class of swaps would
adversely affect the business operations of the derivatives
clearing organization, threaten the financial integrity of
the derivatives clearing organization, or pose a systemic
risk to the derivatives clearing organization; and
``(ii) affect the authority of the Commission to enforce
the open access provisions of paragraph (1) with respect to a
swap, group,

[[Page S2875]]

category, type, or class of swaps that is listed for clearing
by a derivatives clearing organization.
``(6) Required reporting.--
``(A) Both counterparties.--Both counterparties to a swap
that is not cleared by any derivatives clearing organization
shall report such a swap either to a registered swap
repository described in section 21 or, if there is no
repository that would accept the swap, to the Commission
pursuant to section 4r.
``(B) Timing.--Counterparties to a swap shall submit the
reports required under subparagraph (A) not later than such
time period as the Commission may by rule or regulation
prescribe.
``(7) Transition rules.--
``(A) Reporting transition rules.--Rules adopted by the
Commission under this section shall provide for the reporting
of data, as follows:
``(i) Swaps entered into before date of enactment of this
subsection.--Swaps entered into before the date of the
enactment of this subsection shall be reported to a
registered swap repository or the Commission not later than
180 days after the effective date of this subsection.
``(ii) Swaps entered into on or after date of enactment of
this subsection.--Swaps entered into on or after such date of
enactment shall be reported to a registered swap repository
or the Commission not later than the later of--

``(I) 90 days after such effective date; or
``(II) such other time after entering into the swap as the
Commission may prescribe by rule or regulation.

``(B) Clearing transition rules.--
``(i) Swaps entered into before the date of the enactment
of this subsection.--Swaps entered into before the date of
the enactment of this subsection are exempt from the clearing
requirements of this subsection if reported pursuant to
subparagraph (A)(i).
``(ii) Swaps entered into before application of clearing
requirement.--Swaps entered into before application of the
clearing requirement pursuant to this subsection are exempt
from the clearing requirements of this subsection if reported
pursuant to subparagraph (A)(ii).
``(8) Trade execution.--
``(A) In general.--With respect to transactions involving
swaps subject to the clearing requirement of paragraph (1),
counterparties shall--
``(i) execute the transaction on a board of trade
designated as a contract market under section 5; or
``(ii) execute the transaction on a swap execution facility
registered under section 5h or a swap execution facility that
is exempt from registration under section 5h(f) of this Act.
``(B) Exception.--The requirements of clauses (i) and (ii)
of subparagraph (A) shall not apply if no board of trade or
swap execution facility makes the swap available to trade or
a swap transactions where a commercial end user opts to use
the clearing exemption under paragraph (9).
``(9) Required exemption.--Subject to paragraph (4), the
Commission shall exempt a swap from the requirements of
paragraphs (1) and (8) and any rules issued under this
subsection, if no derivatives clearing organization
registered under this Act or no derivatives clearing
organization that is exempt from registration under section
5b(j) of this Act will accept the swap from clearing.
``(10) End user clearing exemption.--
``(A) Definition of commercial end user.--
``(i) In general.--In this paragraph, the term `commercial
end user' means any person other than a financial entity
described in clause (ii) who, as its primary business
activity, owns, uses, produces, processes, manufactures,
distributes, merchandises, or markets goods, services, or
commodities (which shall include but not be limited to coal,
natural gas, electricity, ethanol, crude oil, gasoline,
propane, distillates, and other hydrocarbons) either
individually or in a fiduciary capacity.
``(ii) Financial entity.--The term `financial entity'
means--

``(I) a swap dealer, major swap participant, security-based
swap dealer, or major security-based swap participant;
``(II) a person predominantly engaged in activities that
are in the business of banking or financial in nature, as
defined in Section 4(k) of the Bank Holding Company Act of
1956;
``(III) a person predominantly engaged in activities that
are financial in nature;
``(IV) a commodity pool or a private fund as defined in
section 202(a) of the Investment Advisers Act of 1940 (15
U.S.C. 80b-2(a)); or
``(V) a person that is registered or required to be
registered with the Commission.

``(B) End user clearing exemption.--
``(i) In general.--Subject to clause (ii), in the event
that a swap is subject to the mandatory clearing requirement
under paragraph (1), and 1 of the counterparties to the swap
is a commercial end user, that counterparty--

``(I)(aa) may elect not to clear the swap, as required
under paragraph (1); or
``(bb) may elect to require clearing of the swap; and
``(II) if the end user makes an election under subclause
(I)(bb), shall have the sole right to select the derivatives
clearing organization at which the swap will be cleared.

``(ii) Limitation.--A commercial end user may only make an
election under clause (i) if the end user is using the swap
to hedge its own commercial risk.
``(C) Treatment of affiliates.--
``(i) In general.--An affiliate of a commercial end user
(including affiliate entities predominantly engaged in
providing financing for the purchase of the merchandise or
manufactured goods of the commercial end user) may make an
election under subparagraph (B)(i) only if the affiliate,
acting on behalf of the commercial end user and as an agent,
uses the swap to hedge or mitigate the commercial risk of the
commercial end user parent or other affiliate of the
commercial end user that is not a financial entity.
``(ii) Prohibition relating to certain affiliates.--An
affiliate of a commercial end user shall not use the
exemption under subparagraph (B) if the affiliate is--

``(I) a swap dealer;
``(II) a security-based swap dealer;
``(III) a major swap participant;
``(IV) a major security-based swap participant;
``(V) 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 paragraph (1) or (7) of subsection
(c) of that Act (15 U.S.C. 80a-3(c));
``(VI) a commodity pool;
``(VII) a bank holding company with over $50,000,000,000 in
consolidated assets; or
``(VIII) an affiliate of any entity described in subclauses
(I) through (VII).

``(D) Abuse of exemption.--The Commission may prescribe
such rules or issue interpretations of the rules as the
Commission determines to be necessary to prevent abuse of the
exemption described in subparagraph (B). The Commission may
also request information from those entities claiming the
clearing exemption as necessary to prevent abuse of the
exemption described in subparagraph (B).
``(E) Option to clear.--
``(i) Swaps required to be cleared entered into with a
financial entity.--With respect to any swap that is required
to be cleared by a derivatives clearing organization and
entered into by a swap dealer or a major swap participant
with a financial entity, the financial entity shall have the
sole right to select the derivatives clearing organization at
which the swap will be cleared.
``(ii) Swaps not required to be cleared entered into with a
financial entity or commercial end user.--With respect to any
swap that is not required to be cleared by a derivatives
clearing organization and entered into by a swap dealer or a
major swap participant with a financial entity or commercial
end user, the financial entity or commercial end user--

``(I) may elect to require clearing of the swap; and
``(II) shall have the sole right to select the derivatives
clearing organization at which the swap will be cleared.''.

(b) Commodity Exchange Act.--Section 2 of the Commodity
Exchange Act (7 U.S.C. 2) is amended by adding at the end the
following:
``(j) Audit Committee Approval.--Exemptions from the
requirements of subsection (h)(2)(F) to clear a swap and
subsection (b) to trade a swap through a board of trade or
swap execution facility shall be available to a counterparty
that is an issuer of securities that are registered under
section 12 of the Securities Exchange Act of 1934 (15 U.S.C.
78l) or that is required to file reports pursuant to section
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o)
only if the issuer's audit committee has reviewed and
approved its decision to enter into swaps that are subject to
such exemptions.''.
(c) Grandfather Provisions.--
(1) Legal certainty for certain transactions in exempt
commodities.--Not later than 60 days after the date of
enactment of this Act, a person may submit to the Commodity
Futures Trading Commission a petition to remain subject to
section 2(h) of the Commodity Exchange Act (7 U.S.C. 2(h))
(as in effect on the day before the date of enactment of this
Act).
(2) Consideration; authority of commodity futures trading
commission.--The Commodity Futures Trading Commission--
(A) shall consider any petition submitted under
subparagraph (A) in a prompt manner; and
(B) may allow a person to continue operating subject to
section 2(h) of the Commodity Exchange Act (7 U.S.C. 2(h))
(as in effect on the day before the date of enactment of this
Act) for not longer than a 1-year period.
(3) Agricultural swaps.--
(A) In general.--Except as provided in paragraph (2), no
person shall offer to enter into, enter into, or confirm the
execution of, any swap in an agricultural commodity (as
defined by the Commodity Futures Trading Commission).
(B) Exception.--Notwithstanding paragraph (1), a person may
offer to enter into, enter into, or confirm the execution of,
any swap in an agricultural commodity pursuant to section
4(c) of the Commodity Exchange Act (7 U.S.C. 6(c)) or any
rule, regulation, or order issued thereunder (including any
rule, regulation, or order in effect as of the date of
enactment of this Act) by the Commodity Futures Trading
Commission to allow swaps under such terms and conditions as
the Commission shall prescribe.
(4) Required reporting.--If the exception described in
paragraph (2) applies, and there is no facility that makes
the swap available to trade, the counterparties shall comply
with any recordkeeping and transaction reporting requirements
that may be prescribed

[[Page S2876]]

by the Commission with respect to swaps subject to the
requirements of paragraph (1).

SEC. 724. SWAPS; SEGREGATION AND BANKRUPTCY TREATMENT.

(a) Segregation Requirements for Cleared Swaps.--Section 4d
of the Commodity Exchange Act (7 U.S.C. 6d) (as amended by
section 732) is amended by adding at the end the following:
``(f) Swaps.--
``(1) Registration requirement.--It shall be unlawful for
any person to accept any money, securities, or property (or
to extend any credit in lieu of money, securities, or
property) from, for, or on behalf of a swaps customer to
margin, guarantee, or secure a swap cleared by or through a
derivatives clearing organization (including money,
securities, or property accruing to the customer as the
result of such a swap), unless the person shall have
registered under this Act with the Commission as a futures
commission merchant, and the registration shall not have
expired nor been suspended nor revoked.
``(2) Cleared swaps.--
``(A) Segregation required.--A futures commission merchant
shall treat and deal with all money, securities, and property
of any swaps customer received to margin, guarantee, or
secure a swap cleared by or though a derivatives clearing
organization (including money, securities, or property
accruing to the swaps customer as the result of such a swap)
as belonging to the swaps customer.
``(B) Commingling prohibited.--Money, securities, and
property of a swaps customer described in subparagraph (A)
shall be separately accounted for and shall not be commingled
with the funds of the futures commission merchant or be used
to margin, secure, or guarantee any trades or contracts of
any swaps customer or person other than the person for whom
the same are held.
``(3) Exceptions.--
``(A) Use of funds.--
``(i) In general.--Notwithstanding paragraph (2), money,
securities, and property of a swaps customer of a futures
commission merchant described in paragraph (2) may, for
convenience, be commingled and deposited in the same 1 or
more accounts with any bank or trust company or with a
derivatives clearing organization.
``(ii) Withdrawal.--Notwithstanding paragraph (2), such
share of the money, securities, and property described in
clause (i) as in the normal course of business shall be
necessary to margin, guarantee, secure, transfer, adjust, or
settle a cleared swap with a derivatives clearing
organization, or with any member of the derivatives clearing
organization, may be withdrawn and applied to such purposes,
including the payment of commissions, brokerage, interest,
taxes, storage, and other charges, lawfully accruing in
connection with the cleared swap.
``(B) Commission action.--Notwithstanding paragraph (2), in
accordance with such terms and conditions as the Commission
may prescribe by rule, regulation, or order, any money,
securities, or property of the swaps customer of a futures
commission merchant described in paragraph (2) may be
commingled and deposited as provided in this section with any
other money, securities, or property received by the futures
commission merchant and required by the Commission to be
separately accounted for and treated and dealt with as
belonging to the swaps customer of the futures commission
merchant.
``(4) Permitted investments.--Money described in paragraph
(2) may be invested in obligations of the United States, in
general obligations of any State or of any political
subdivision of a State, and in obligations fully guaranteed
as to principal and interest by the United States, or in any
other investment that the Commission may by rule or
regulation prescribe, and such investments shall be made in
accordance with such rules and regulations and subject to
such conditions as the Commission may prescribe.
``(5) Commodity contract.--A swap cleared by or through a
derivatives clearing organization shall be considered to be a
commodity contract as such term is defined in section 761 of
title 11, United States Code, with regard to all money,
securities, and property of any swaps customer received by a
futures commission merchant or a derivatives clearing
organization to margin, guarantee, or secure the swap
(including money, securities, or property accruing to the
customer as the result of the swap).
``(6) Prohibition.--It shall be unlawful for any person,
including any derivatives clearing organization and any
depository institution, that has received any money,
securities, or property for deposit in a separate account or
accounts as provided in paragraph (2) to hold, dispose of, or
use any such money, securities, or property as belonging to
the depositing futures commission merchant or any person
other than the swaps customer of the futures commission
merchant.''.
(b) Bankruptcy Treatment of Cleared Swaps.--Section 761 of
title 11, United States Code, is amended--
(1) in paragraph (4), by striking subparagraph (F) and
inserting the following:
``(F)(i) any other contract, option, agreement, or
transaction that is similar to a contract, option, agreement,
or transaction referred to in this paragraph; and
``(ii) with respect to a futures commission merchant or a
clearing organization, any other contract, option, agreement,
or transaction, in each case, that is cleared by a clearing
organization;''; and
(2) in paragraph (9)(A)(i), by striking ``the commodity
futures account'' and inserting ``a commodity contract
account''.
(c) Segregation Requirements for Uncleared Swaps.--Section
4s of the Commodity Exchange Act (as added by section 731) is
amended by adding at the end the following:
``(l) Segregation Requirements.--
``(1) Segregation of assets held as collateral in uncleared
swap transactions.--
``(A) Notification.--A swap dealer or major swap
participant shall be required to notify the counterparty of
the swap dealer or major swap participant at the beginning of
a swap transaction that the counterparty has the right to
require segregation of the funds or other property supplied
to margin, guarantee, or secure the obligations of the
counterparty.
``(B) Segregation and maintenance of funds.--At the request
of a counterparty to a swap that provides funds or other
property to a swap dealer or major swap participant to
margin, guarantee, or secure the obligations of the
counterparty, the swap dealer or major swap participant
shall--
``(i) segregate the funds or other property for the benefit
of the counterparty; and
``(ii) in accordance with such rules and regulations as the
Commission may promulgate, maintain the funds or other
property in a segregated account separate from the assets and
other interests of the swap dealer or major swap participant.
``(2) Applicability.--The requirements described in
paragraph (1) shall--
``(A) apply only to a swap between a counterparty and a
swap dealer or major swap participant that is not submitted
for clearing to a derivatives clearing organization; and
``(B)(i) not apply to variation margin payments; or
``(ii) not preclude any commercial arrangement regarding--
``(I) the investment of segregated funds or other property
that may only be invested in such investments as the
Commission may permit by rule or regulation; and
``(II) the related allocation of gains and losses resulting
from any investment of the segregated funds or other
property.
``(3) Use of independent third-party custodians.--The
segregated account described in paragraph (1) shall be--
``(A) carried by an independent third-party custodian; and
``(B) designated as a segregated account for and on behalf
of the counterparty.
``(4) Reporting requirement.--If the counterparty does not
choose to require segregation of the funds or other property
supplied to margin, guarantee, or secure the obligations of
the counterparty, the swap dealer or major swap participant
shall report to the counterparty of the swap dealer or major
swap participant on a quarterly basis that the back office
procedures of the swap dealer or major swap participant
relating to margin and collateral requirements are in
compliance with the agreement of the counterparties.''.

SEC. 725. DERIVATIVES CLEARING ORGANIZATIONS.

(a) Registration Requirement.--Section 5b of the Commodity
Exchange Act (7 U.S.C. 7a-1) is amended by striking
subsections (a) and (b) and inserting the following:
``(a) Registration Requirement.--
``(1) In general.--Except as provided in paragraph (2), it
shall be unlawful for a derivatives clearing organization,
directly or indirectly, to make use of the mails or any means
or instrumentality of interstate commerce to perform the
functions of a derivatives clearing organization with respect
to--
``(A) a contract of sale of a commodity for future delivery
(or an option on the contract of sale) or option on a
commodity, in each case, unless the contract or option is--
``(i) excluded from this Act by subsection (a)(1)(C)(i),
(c), or (f) of section 2; or
``(ii) a security futures product cleared by a clearing
agency registered with the Securities and Exchange Commission
under the Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.); or
``(B) a swap.
``(2) Exception.--Paragraph (1) shall not apply to a
derivatives clearing organization that is registered with the
Commission.
``(b) Voluntary Registration.--A person that clears 1 or
more agreements, contracts, or transactions that are not
required to be cleared under this Act may register with the
Commission as a derivatives clearing organization.''.
(b) Registration for Depository Institutions and Clearing
Agencies; Exemptions; Compliance Officer; Annual Reports.--
Section 5b of the Commodity Exchange Act (7 U.S.C. 7a-1) is
amended by adding at the end the following:
``(g) Required Registration for Depository Institutions and
Clearing Agencies.--A person that is required to be
registered as a derivatives clearing organization under this
section shall register with the Commission regardless of
whether the person is also licensed as a depository
institution (as that term is defined in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813) or a clearing
agency registered with the Securities and Exchange Commission
under the Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.).
``(h) Existing Depository Institutions and Clearing
Agencies.--
``(1) In general.--A depository institution or clearing
agency registered with the Securities and Exchange Commission
under the

[[Page S2877]]

Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) that
is required to be registered as a derivatives clearing
organization under this section is deemed to be registered
under this section to the extent that, before the date of
enactment of this subsection--
``(A) the depository institution cleared swaps as a
multilateral clearing organization; or
``(B) the clearing agency cleared swaps.
``(2) Conversion of depository institutions.--A depository
institution to which this paragraph applies may, by the vote
of the shareholders owning not less than 51 percent of the
voting interests of the depository institution, be converted
into a State corporation, partnership, limited liability
company, or similar legal form pursuant to a plan of
conversion, if the conversion is not in contravention of
applicable State law.
``(i) Exemptions.--The Commission may exempt, conditionally
or unconditionally, a derivatives clearing organization from
registration under this section for the clearing of swaps if
the Commission determines that the derivatives clearing
organization is subject to comparable, comprehensive
supervision and regulation by the Securities and Exchange
Commission or the appropriate government authorities in the
home country of the organization. Such conditions may
include, but are not limited to, requiring that the
derivatives clearing organization be available for inspection
by the Commission and make available all information
requested by the Commission.
``(j) Designation of Chief Compliance Officer.--
``(1) In general.--Each derivatives clearing organization
shall designate an individual to serve as a chief compliance
officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior officer
of the derivatives clearing organization;
``(B) review the compliance of the derivatives clearing
organization with respect to the core principles described in
subsection (c)(2);
``(C) in consultation with the board of the derivatives
clearing organization, a body performing a function similar
to the board of the derivatives clearing organization, or the
senior officer of the derivatives clearing organization,
resolve any conflicts of interest that may arise;
``(D) be responsible for administering each policy and
procedure that is required to be established pursuant to this
section;
``(E) ensure compliance with this Act (including
regulations) relating to agreements, contracts, or
transactions, including each rule prescribed by the
Commission under this section;
``(F) establish procedures for the remediation of
noncompliance issues identified by the compliance officer
through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(G) establish and follow appropriate procedures for the
handling, management response, remediation, retesting, and
closing of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules prescribed by
the Commission, the chief compliance officer shall annually
prepare and sign a report that contains a description of--
``(i) the compliance of the derivatives clearing
organization of the compliance officer with respect to this
Act (including regulations); and
``(ii) each policy and procedure of the derivatives
clearing organization of the compliance officer (including
the code of ethics and conflict of interest policies of the
derivatives clearing organization).
``(B) Requirements.--A compliance report under subparagraph
(A) shall--
``(i) accompany each appropriate financial report of the
derivatives clearing organization that is required to be
furnished to the Commission pursuant to this section; and
``(ii) include a certification that, under penalty of law,
the compliance report is accurate and complete.''.
(c) Core Principles for Derivatives Clearing
Organizations.--Section 5b(c) of the Commodity Exchange Act
(7 U.S.C. 7a-1(c)) is amended by striking paragraph (2) and
inserting the following:
``(2) Core principles for derivatives clearing
organizations.--
``(A) Compliance.--
``(i) In general.--To be registered and to maintain
registration as a derivatives clearing organization, a
derivatives clearing organization shall comply with each core
principle described in this paragraph and any requirement
that the Commission may impose by rule or regulation pursuant
to section 8a(5).
``(ii) Discretion of derivatives clearing organization.--
Subject to any rule or regulation prescribed by the
Commission, a derivatives clearing organization shall have
reasonable discretion in establishing the manner by which the
derivatives clearing organization complies with each core
principle described in this paragraph.
``(B) Financial resources.--
``(i) In general.--Each derivatives clearing organization
shall have adequate financial, operational, and managerial
resources, as determined by the Commission, to discharge each
responsibility of the derivatives clearing organization.
``(ii) Minimum amount of financial resources.--Each
derivatives clearing organization shall possess financial
resources that, at a minimum, exceed the total amount that
would--

``(I) enable the organization to meet its financial
obligations to its members and participants notwithstanding a
default by the member or participant creating the largest
financial exposure for that organization in extreme but
plausible market conditions; and
``(II) enable the derivatives clearing organization to
cover the operating costs of the derivatives clearing
organization for a period of 1 year (as calculated on a
rolling basis).

``(C) Participant and product eligibility.--
``(i) In general.--Each derivatives clearing organization
shall establish--

``(I) appropriate admission and continuing eligibility
standards (including sufficient financial resources and
operational capacity to meet obligations arising from
participation in the derivatives clearing organization) for
members of, and participants in, the derivatives clearing
organization; and
``(II) appropriate standards for determining the
eligibility of agreements, contracts, and transactions
submitted to the derivatives clearing organization for
clearing.

``(ii) Required procedures.--Each derivatives clearing
organization shall establish and implement procedures to
verify, on an ongoing basis, the compliance of each
participation and membership requirement of the derivatives
clearing organization.
``(iii) Requirements.--The participation and membership
requirements of each derivatives clearing organization
shall--

``(I) be objective;
``(II) be publicly disclosed; and
``(III) permit fair and open access.

``(D) Risk management.--
``(i) In general.--Each derivatives clearing organization
shall ensure that the derivatives clearing organization
possesses the ability to manage the risks associated with
discharging the responsibilities of the derivatives clearing
organization through the use of appropriate tools and
procedures.
``(ii) Measurement of credit exposure.--Each derivatives
clearing organization shall--

``(I) not less than once during each business day of the
derivatives clearing organization, measure the credit
exposures of the derivatives clearing organization to each
member and participant of the derivatives clearing
organization; and
``(II) monitor each exposure described in subclause (I)
periodically during the business day of the derivatives
clearing organization.

``(iii) Limitation of exposure to potential losses from
defaults.--Each derivatives clearing organization, through
margin requirements and other risk control mechanisms, shall
limit the exposure of the derivatives clearing organization
to potential losses from defaults by members and participants
of the derivatives clearing organization to ensure that--

``(I) the operations of the derivatives clearing
organization would not be disrupted; and
``(II) nondefaulting members or participants would not be
exposed to losses that nondefaulting members or participants
cannot anticipate or control.

``(iv) Margin requirements.--The margin required from each
member and participant of a derivatives clearing organization
shall be sufficient to cover potential exposures in normal
market conditions.
``(v) Requirements regarding models and parameters.--Each
model and parameter used in setting margin requirements under
clause (iv) shall be--

``(I) risk-based; and
``(II) reviewed on a regular basis.

``(E) Settlement procedures.--Each derivatives clearing
organization shall--
``(i) complete money settlements on a timely basis (but not
less frequently than once each business day);
``(ii) employ money settlement arrangements to eliminate or
strictly limit the exposure of the derivatives clearing
organization to settlement bank risks (including credit and
liquidity risks from the use of banks to effect money
settlements);
``(iii) ensure that money settlements are final when
effected;
``(iv) maintain an accurate record of the flow of funds
associated with each money settlement;
``(v) possess the ability to comply with each term and
condition of any permitted netting or offset arrangement with
any other clearing organization;
``(vi) regarding physical settlements, establish rules that
clearly state each obligation of the derivatives clearing
organization with respect to physical deliveries; and
``(vii) ensure that each risk arising from an obligation
described in clause (vi) is identified and managed.
``(F) Treatment of funds.--
``(i) Required standards and procedures.--Each derivatives
clearing organization shall establish standards and
procedures that are designed to protect and ensure the safety
of member and participant funds and assets.
``(ii) Holding of funds and assets.--Each derivatives
clearing organization shall hold member and participant funds
and assets in a manner by which to minimize the risk of loss
or of delay in the access by the derivatives clearing
organization to the assets and funds.

[[Page S2878]]

``(iii) Permissible investments.--Funds and assets invested
by a derivatives clearing organization shall be held in
instruments with minimal credit, market, and liquidity risks.
``(G) Default rules and procedures.--
``(i) In general.--Each derivatives clearing organization
shall have rules and procedures designed to allow for the
efficient, fair, and safe management of events during which
members or participants--

``(I) become insolvent; or
``(II) otherwise default on the obligations of the members
or participants to the derivatives clearing organization.

``(ii) Default procedures.--Each derivatives clearing
organization shall--

``(I) clearly state the default procedures of the
derivatives clearing organization;
``(II) make publicly available the default rules of the
derivatives clearing organization; and
``(III) ensure that the derivatives clearing organization
may take timely action--

``(aa) to contain losses and liquidity pressures; and
``(bb) to continue meeting each obligation of the
derivatives clearing organization.
``(H) Rule enforcement.--Each derivatives clearing
organization shall--
``(i) maintain adequate arrangements and resources for--

``(I) the effective monitoring and enforcement of
compliance with the rules of the derivatives clearing
organization; and
``(II) the resolution of disputes;

``(ii) have the authority and ability to discipline, limit,
suspend, or terminate the activities of a member or
participant due to a violation by the member or participant
of any rule of the derivatives clearing organization; and
``(iii) report to the Commission regarding rule enforcement
activities and sanctions imposed against members and
participants as provided in clause (ii).
``(I) System safeguards.--Each derivatives clearing
organization shall--
``(i) establish and maintain a program of risk analysis and
oversight to identify and minimize sources of operational
risk through the development of appropriate controls and
procedures, and automated systems, that are reliable, secure,
and have adequate scalable capacity;
``(ii) establish and maintain emergency procedures, backup
facilities, and a plan for disaster recovery that allows
for--

``(I) the timely recovery and resumption of operations of
the derivatives clearing organization; and
``(II) the fulfillment of each obligation and
responsibility of the derivatives clearing organization; and

``(iii) periodically conduct tests to verify that the
backup resources of the derivatives clearing organization are
sufficient to ensure daily processing, clearing, and
settlement.
``(J) Reporting.--Each derivatives clearing organization
shall provide to the Commission all information that the
Commission determines to be necessary to conduct oversight of
the derivatives clearing organization.
``(K) Recordkeeping.--Each derivatives clearing
organization shall maintain records of all activities related
to the business of the derivatives clearing organization as a
derivatives clearing organization--
``(i) in a form and manner that is acceptable to the
Commission; and
``(ii) for a period of not less than 5 years.
``(L) Public information.--
``(i) In general.--Each derivatives clearing organization
shall provide to market participants sufficient information
to enable the market participants to identify and evaluate
accurately the risks and costs associated with using the
services of the derivatives clearing organization.
``(ii) Availability of information.--Each derivatives
clearing organization shall make information concerning the
rules and operating procedures governing the clearing and
settlement systems of the derivatives clearing organization
available to market participants.
``(iii) Public disclosure.--Each derivatives clearing
organization shall disclose publicly and to the Commission
information concerning--

``(I) the terms and conditions of each contract, agreement,
and other transaction cleared and settled by the derivatives
clearing organization;
``(II) each clearing and other fee that the derivatives
clearing organization charges the members and participants of
the derivatives clearing organization;
``(III) the margin-setting methodology, and the size and
composition, of the financial resource package of the
derivatives clearing organization;
``(IV) daily settlement prices, volume, and open interest
for each contract settled or cleared by the derivatives
clearing organization; and
``(V) any other matter relevant to participation in the
settlement and clearing activities of the derivatives
clearing organization.

``(M) Information-sharing.--Each derivatives clearing
organization shall--
``(i) enter into, and abide by the terms of, each
appropriate and applicable domestic and international
information-sharing agreement; and
``(ii) use relevant information obtained from each
agreement described in clause (i) in carrying out the risk
management program of the derivatives clearing organization.
``(N) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, a
derivatives clearing organization shall not--
``(i) adopt any rule or take any action that results in any
unreasonable restraint of trade; or
``(ii) impose any material anticompetitive burden.
``(O) Governance fitness standards.--
``(i) Governance arrangements.--Each derivatives clearing
organization shall establish governance arrangements that are
transparent--

``(I) to fulfill public interest requirements; and
``(II) to support the objectives of owners and
participants.

``(ii) Fitness standards.--Each derivatives clearing
organization shall establish and enforce appropriate fitness
standards for--

``(I) directors;
``(II) members of any disciplinary committee;
``(III) members of the derivatives clearing organization;
``(IV) any other individual or entity with direct access to
the settlement or clearing activities of the derivatives
clearing organization; and
``(V) any party affiliated with any individual or entity
described in this clause.

``(P) Conflicts of interest.--Each derivatives clearing
organization shall--
``(i) establish and enforce rules to minimize conflicts of
interest in the decision-making process of the derivatives
clearing organization; and
``(ii) establish a process for resolving conflicts of
interest described in clause (i).
``(Q) Composition of governing boards.--Each derivatives
clearing organization shall ensure that the composition of
the governing board or committee of the derivatives clearing
organization includes market participants.
``(R) Legal risk.--Each derivatives clearing organization
shall have a well-founded, transparent, and enforceable legal
framework for each aspect of the activities of the
derivatives clearing organization.
``(S) Modification of core principles.--The Commission may
conform the core principles established in this paragraph to
reflect evolving United States and international
standards.''.
(d) Conflicts of Interest.--The Commodity Futures Trading
Commission shall adopt rules mitigating conflicts of interest
in connection with the conduct of business by a swap dealer
or a major swap participant with a derivatives clearing
organization, board of trade, or a swap execution facility
that clears or trades swaps in which the swap dealer or major
swap participant has a material debt or material equity
investment.
(e) Reporting Requirements.--Section 5b of the Commodity
Exchange Act (7 U.S.C. 7a-1) (as amended by subsection (b))
is amended by adding at the end the following:
``(k) Reporting Requirements.--
``(1) Duty of derivatives clearing organizations.--Each
derivatives clearing organization that clears swaps shall
provide to the Commission all information that is determined
by the Commission to be necessary to perform each
responsibility of the Commission under this Act.
``(2) Data collection and maintenance requirements.--The
Commission shall adopt data collection and maintenance
requirements for swaps cleared by derivatives clearing
organizations that are comparable to the corresponding
requirements for--
``(A) swaps data reported to swap data repositories; and
``(B) swaps traded on swap execution facilities.
``(3) Reports on security-based swap agreements to be
shared with the securities and exchange commission.--
``(A) In general.--A derivatives clearing organization that
clears security-based swap agreements (as defined in section
3(a)(79) of the Securities Exchange Act) shall, upon request,
make available to the Securities and Exchange Commission all
books and records relating to such security-based swap
agreements, consistent with the confidentiality and
disclosure requirements of section 8.
``(B) Jurisdiction.--Nothing in this paragraph shall affect
the exclusive jurisdiction of the Commission to prescribe
recordkeeping and reporting requirements for a derivatives
clearing organization that is registered with the
Commission.''
``(4) Information sharing.--Subject to section 8, and upon
request, the Commission shall share information collected
under paragraph (2) with--
``(A) the Board;
``(B) the Securities and Exchange Commission;
``(C) each appropriate prudential regulator;
``(D) the Financial Stability Oversight Council;
``(E) the Department of Justice; and
``(F) any other person that the Commission determines to be
appropriate, including--
``(i) foreign financial supervisors (including foreign
futures authorities);
``(ii) foreign central banks; and
``(iii) foreign ministries.
``(5) Confidentiality and indemnification agreement.--
Before the Commission may share information with any entity
described in paragraph (4)--
``(A) the Commission shall receive a written agreement from
each entity stating that the entity shall abide by the
confidentiality requirements described in section 8 relating

[[Page S2879]]

to the information on swap transactions that is provided; and
``(B) each entity shall agree to indemnify the Commission
for any expenses arising from litigation relating to the
information provided under section 8.
``(6) Public information.--Each derivatives clearing
organization that clears swaps shall provide to the
Commission (including any designee of the Commission)
information under paragraph (2) in such form and at such
frequency as is required by the Commission to comply with the
public reporting requirements contained in section
2(a)(13).''.
(f) Public Disclosure.--Section 8(e) of the Commodity
Exchange Act (7 U.S.C. 12(e)) is amended in the last
sentence--
(1) by inserting ``, central bank and ministries,'' after
``department'' each place it appears; and
(2) by striking ``. is a party.'' and inserting ``, is a
party.''.
(g) Legal Certainty for Identified Banking Products.--
(1) Repeals.--The Legal Certainty for Bank Products Act of
2000 (7 U.S.C. 27 et seq.) is amended--
(A) by striking sections 404 and 407 (7 U.S.C. 27b, 27e);
(B) in section 402 (7 U.S.C. 27), by striking subsection
(d); and
(C) in section 408 (7 U.S.C. 27f)--
(i) in subsection (c)--

(I) by striking ``in the case'' and all that follows
through ``a hybrid'' and inserting ``in the case of a
hybrid'';
(II) by striking ``; or'' and inserting a period; and
(III) by striking paragraph (2);

(ii) by striking subsection (b); and
(iii) by redesignating subsection (c) as subsection (b).
(2) Legal certainty for bank products act of 2000.--Section
403 of the Legal Certainty for Bank Products Act of 2000 (7
U.S.C. 27a) is amended to read as follows:

``SEC. 403. EXCLUSION OF IDENTIFIED BANKING PRODUCT.

``(a) Exclusion.--Except as provided in subsection (b) or
(c)--
``(1) the Commodity Exchange Act (7 U.S.C. 1 et seq.) shall
not apply to, and the Commodity Futures Trading Commission
shall not exercise regulatory authority under the Commodity
Exchange Act (7 U.S.C. 1 et seq.) with respect to, an
identified banking product; and
``(2) the definitions of `security-based swap' in section
3(a)(68) of the Securities Exchange Act of 1934 and
`security-based swap agreement' in section 3(a)(79) of the
Securities Exchange Act of 1934 do not include any identified
bank product.
``(b) Exception.--An appropriate Federal banking agency may
except an identified banking product of a bank under its
regulatory jurisdiction from the exclusion in subsection (a)
if the agency determines, in consultation with the Commodity
Futures Trading Commission and the Securities and Exchange
Commission, that the product--
``(1) would meet the definition of a `swap' under section
1a(46) of the Commodity Exchange Act (7 U.S.C. 1a) or a
`security-based swap' under that section 3(a)(68) of the
Securities Exchange Act of 1934; and
``(2) has become known to the trade as a swap or security-
based swap, or otherwise has been structured as an identified
banking product for the purpose of evading the provisions of
the Commodity Exchange Act (7 U.S.C. 1 et seq.), the
Securities Act of 1933 (15 U.S.C. 77a et seq.), or the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
``(c) Exception.--The exclusions in subsection (a) shall
not apply to an identified bank product that--
``(1) is a product of a bank that is not under the
regulatory jurisdiction of an appropriate Federal banking
agency;
``(2) meets the definition of swap in section 1a(46) of the
Commodity Exchange Act or security-based swap in section
3(a)(68) of the Securities Exchange Act of 1934; and
``(3) has become known to the trade as a swap or security-
based swap, or otherwise has been structured as an identified
banking product for the purpose of evading the provisions of
the Commodity Exchange Act (7 U.S.C. 1 et seq.), the
Securities Act of 1933 (15 U.S.C. 77a et seq.), or the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).''.

SEC. 726. RULEMAKING ON CONFLICT OF INTEREST.

(a) In General.--Not later than 180 days after the date of
enactment of the Wall Street Transparency and Accountability
Act of 2010, the Commodity Futures Trading Commission shall
determine whether to adopt rules to establish limits on the
control of any derivatives clearing organization that clears
swaps, or swap execution facility or board of trade
designated as a contract market that posts swaps or makes
swaps available for trading, by a bank holding company (as
defined in section 2 of the Bank Holding Company Act of 1956
(12 U.S.C. 1841)) with total consolidated assets of
$50,000,000,000 or more, a nonbank financial company (as
defined in section 102) supervised by the Board of Governors
of the Federal Reserve System, an affiliate of such a bank
holding company or nonbank financial company, a swap dealer,
major swap participant, or associated person of a swap dealer
or major swap participant.
(b) Purposes.--The Commission shall adopt rules if it
determines, after the review described in subsection (a),
that such rules are necessary or appropriate to improve the
governance of, or to mitigate systemic risk, promote
competition, or mitigate conflicts of interest in connection
with a swap dealer or major swap participant's conduct of
business with, a derivatives clearing organization, contract
market, or swap execution facility that clears or posts swaps
or makes swaps available for trading and in which such swap
dealer or major swap participant has a material debt or
equity investment.

SEC. 727. PUBLIC REPORTING OF SWAP TRANSACTION DATA.

Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a))
is amended by adding at the end the following:
``(13) Public availability of swap transaction data.--
``(A) Definition of real-time public reporting.--In this
paragraph, the term `real-time public reporting' means to
report data relating to a swap transaction as soon as
technologically practicable after the time at which the swap
transaction has been executed.
``(B) Purpose.--The purpose of this section is to authorize
the Commission to make swap transaction and pricing data
available to the public in such form and at such times as the
Commission determines appropriate to enhance price discovery.
``(C) General rule.--The Commission is authorized and
required to provide by rule for the public availability of
swap transaction and pricing data as follows:
``(i) With respect to those swaps that are subject to the
mandatory clearing requirement described in subsection (h)(2)
(including those swaps that are exempted from the requirement
pursuant to subsection (h)(10)), the Commission shall require
real-time public reporting for such transactions.
``(ii) With respect to those swaps that are not subject to
the mandatory clearing requirement described in subsection
(h)(2), but are cleared at a registered derivatives clearing
organization, the Commission shall require real-time public
reporting for such transactions.
``(iii) With respect to swaps that are not cleared at a
registered derivatives clearing organization and which are
reported to a swap data repository or the Commission under
subsection (h), the Commission shall make available to the
public, in a manner that does not disclose the business
transactions and market positions of any person, aggregate
data on such swap trading volumes and positions.
``(iv) With respect to swaps that are exempt from the
requirements of subsection (h)(1), pursuant to subsection
(h)(10), the Commission shall require real-time public
reporting for such transactions.
``(D) Registered entities and public reporting.--The
Commission may require registered entities to publicly
disseminate the swap transaction and pricing data required to
be reported under this paragraph.
``(E) Rulemaking required.--With respect to the rule
providing for the public availability of transaction and
pricing data for swaps described in clauses (i) and (ii) of
subparagraph (C), the rule promulgated by the Commission
shall contain provisions--
``(i) to ensure such information does not identify the
participants;
``(ii) to specify the criteria for determining what
constitutes a large notional swap transaction (block trade)
for particular markets and contracts;
``(iii) to specify the appropriate time delay for reporting
large notional swap transactions (block trades) to the
public; and
``(iv) that take into account whether the public disclosure
will materially reduce market liquidity.
``(F) Timeliness of reporting.--Parties to a swap
(including agents of the parties to a swap) shall be
responsible for reporting swap transaction information to the
appropriate registered entity in a timely manner as may be
prescribed by the Commission.
``(14) Semiannual and annual public reporting of aggregate
swap data.--
``(A) In general.--In accordance with subparagraph (B), the
Commission shall issue a written report on a semiannual and
annual basis to make available to the public information
relating to--
``(i) the trading and clearing in the major swap
categories; and
``(ii) the market participants and developments in new
products.
``(B) Use; consultation.--In preparing a report under
subparagraph (A), the Commission shall--
``(i) use information from swap data repositories and
derivatives clearing organizations; and
``(ii) consult with the Office of the Comptroller of the
Currency, the Bank for International Settlements, and such
other regulatory bodies as may be necessary.''.

SEC. 728. SWAP DATA REPOSITORIES.

The Commodity Exchange Act is amended by inserting after
section 20 (7 U.S.C. 24) the following:

``SEC. 21. SWAP DATA REPOSITORIES.

``(a) Registration Requirement.--
``(1) In general.--It shall be unlawful for any person,
unless registered with the Commission, directly or indirectly
to make use of the mails or any means or instrumentality of
interstate commerce to perform the functions of a swap data
repository.
``(2) Inspection and examination.--Each registered swap
data repository shall be subject to inspection and
examination by any representative of the Commission.
``(3) Compliance with core principles.--

[[Page S2880]]

``(A) In general.--To be registered, and maintain
registration, as a swap data repository, the swap data
repository shall comply with--
``(i) the core principles described in this subsection; and
``(ii) any requirement that the Commission may impose by
rule or regulation pursuant to section 8a(5).
``(B) Reasonable discretion of swap data repository.--
Unless otherwise determined by the Commission by rule or
regulation, a swap data repository described in subparagraph
(A) shall have reasonable discretion in establishing the
manner in which the swap data repository complies with the
core principles described in this subsection.
``(b) Standard Setting.--
``(1) Data identification.--The Commission shall prescribe
standards that specify the data elements for each swap that
shall be collected and maintained by each registered swap
data repository.
``(2) Data collection and maintenance.--The Commission
shall prescribe data collection and data maintenance
standards for swap data repositories.
``(3) Comparability.--The standards prescribed by the
Commission under this subsection shall be comparable to the
data standards imposed by the Commission on derivatives
clearing organizations in connection with their clearing of
swaps.
``(4) Sharing of information with securities and exchange
commission.--Registered swap data repositories shall make
available to the Securities and Exchange Commission, upon
request, all books and records relating to security-based
swap agreements that are maintained by such swap data
repository, consistent with the confidentiality and
disclosure requirements of section 8. Nothing in this
paragraph shall affect the exclusive jurisdiction of the
Commission to prescribe recordkeeping and reporting
requirements for a swap data repository that is registered
with the Commission.
``(c) Duties.--A swap data repository shall--
``(1) accept data prescribed by the Commission for each
swap under subsection (b);
``(2) confirm with both counterparties to the swap the
accuracy of the data that was submitted;
``(3) maintain the data described in paragraph (1) in such
form, in such manner, and for such period as may be required
by the Commission;
``(4)(A) provide direct electronic access to the Commission
(or any designee of the Commission, including another
registered entity); and
``(B) provide the information described in paragraph (1) in
such form and at such frequency as the Commission may require
to comply with the public reporting requirements contained in
section 2(a)(13);
``(5) at the direction of the Commission, establish
automated systems for monitoring, screening, and analyzing
swap data, including compliance and frequency of end user
clearing exemption claims by individual and affiliated
entities;
``(6) maintain the privacy of any and all swap transaction
information that the swap data repository receives from a
swap dealer, counterparty, or any other registered entity;
and
``(7) on a confidential basis pursuant to section 8, upon
request, and after notifying the Commission of the request,
make available all data obtained by the swap data repository,
including individual counterparty trade and position data,
to--
``(A) each appropriate prudential regulator;
``(B) the Financial Stability Oversight Council;
``(C) the Securities and Exchange Commission;
``(D) the Department of Justice; and
``(E) any other person that the Commission determines to be
appropriate, including--
``(i) foreign financial supervisors (including foreign
futures authorities);
``(ii) foreign central banks;
``(iii) foreign ministries; and
``(8) establish and maintain emergency procedures, backup
facilities, and a plan for disaster recovery that allows for
the timely recovery and resumption of operations and the
fulfillment of the responsibilities and obligations of the
organization.
``(d) Confidentiality and Indemnification Agreement.--
Before the swap data repository may share information with
any entity described above--
``(1) the swap data repository shall receive a written
agreement from each entity stating that the entity shall
abide by the confidentiality requirements described in
section 8 relating to the information on swap transactions
that is provided; and
``(2) each entity shall agree to indemnify the swap data
repository and the Commission for any expenses arising from
litigation relating to the information provided under section
8.
``(e) Designation of Chief Compliance Officer.--
``(1) In general.--Each swap data repository shall
designate an individual to serve as a chief compliance
officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior officer
of the swap data repository;
``(B) review the compliance of the swap data repository
with respect to the core principles described in subsection
(f);
``(C) in consultation with the board of the swap data
repository, a body performing a function similar to the board
of the swap data repository, or the senior officer of the
swap data repository, resolve any conflicts of interest that
may arise;
``(D) be responsible for administering each policy and
procedure that is required to be established pursuant to this
section;
``(E) ensure compliance with this Act (including
regulations) relating to agreements, contracts, or
transactions, including each rule prescribed by the
Commission under this section;
``(F) establish procedures for the remediation of
noncompliance issues identified by the chief compliance
officer through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(G) establish and follow appropriate procedures for the
handling, management response, remediation, retesting, and
closing of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules prescribed by
the Commission, the chief compliance officer shall annually
prepare and sign a report that contains a description of--
``(i) the compliance of the swap data repository of the
chief compliance officer with respect to this Act (including
regulations); and
``(ii) each policy and procedure of the swap data
repository of the chief compliance officer (including the
code of ethics and conflict of interest policies of the swap
data repository).
``(B) Requirements.--A compliance report under subparagraph
(A) shall--
``(i) accompany each appropriate financial report of the
swap data repository that is required to be furnished to the
Commission pursuant to this section; and
``(ii) include a certification that, under penalty of law,
the compliance report is accurate and complete.
``(f) Core Principles Applicable to Swap Data
Repositories.--
``(1) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, a swap data
repository shall not
``(A) adopt any rule or take any action that results in any
unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on the
trading, clearing, or reporting of transactions.
``(2) Governance arrangements.--Each swap data repository
shall establish governance arrangements that are
transparent--
``(A) to fulfill public interest requirements; and
``(B) to support the objectives of the Federal Government,
owners, and participants.
``(3) Conflicts of interest.--Each swap data repository
shall--
``(A) establish and enforce rules to minimize conflicts of
interest in the decision-making process of the swap data
repository; and
``(B) establish a process for resolving conflicts of
interest described in subparagraph (A).
``(g) Required Registration for Swap Data Repositories.--
Any person that is required to be registered as a swap data
repository under this section shall register with the
Commission regardless of whether that person is also licensed
as a bank or registered with the Securities and Exchange
Commission as a swap data repository.
``(h) Rules.--The Commission shall adopt rules governing
persons that are registered under this section.''.

SEC. 729. REPORTING AND RECORDKEEPING.

The Commodity Exchange Act is amended by inserting after
section 4q (7 U.S.C. 6o-1) the following:

``SEC. 4R. REPORTING AND RECORDKEEPING FOR UNCLEARED SWAPS.

``(a) Required Reporting of Swaps Not Accepted by Any
Derivatives Clearing Organization.--
``(1) In general.--Each swap that is not accepted for
clearing by any derivatives clearing organization shall be
reported to--
``(A) a swap data repository described in section 21; or
``(B) in the case in which there is no swap data repository
that would accept the swap, to the Commission pursuant to
this section within such time period as the Commission may by
rule or regulation prescribe.
``(2) Transition rule for preenactment swaps.--
``(A) Swaps entered into before the date of enactment of
the wall street transparency and accountability act of
2010.--Each swap entered into before the date of enactment of
the Wall Street Transparency and Accountability Act of 2010,
the terms of which have not expired as of the date of
enactment of that Act, shall be reported to a registered swap
data repository or the Commission by a date that is not later
than--
``(i) 30 days after issuance of the interim final rule; or
``(ii) such other period as the Commission determines to be
appropriate.
``(B) Commission rulemaking.--The Commission shall
promulgate an interim final rule within 90 days of the date
of enactment of this section providing for the reporting of
each swap entered into before the date of enactment as
referenced in subparagraph (A).
``(C) Effective date.--The reporting provisions described
in this section shall be effective upon the enactment of this
section.
``(3) Reporting obligations.--

[[Page S2881]]

``(A) Swaps in which only 1 counterparty is a swap dealer
or major swap participant.--With respect to a swap in which
only 1 counterparty is a swap dealer or major swap
participant, the swap dealer or major swap participant shall
report the swap as required under paragraphs (1) and (2).
``(B) Swaps in which 1 counterparty is a swap dealer and
the other a major swap participant.--With respect to a swap
in which 1 counterparty is a swap dealer and the other a
major swap participant, the swap dealer shall report the swap
as required under paragraphs (1) and (2).
``(C) Other swaps.--With respect to any other swap not
described in subparagraph (A) or (B), the counterparties to
the swap shall select a counterparty to report the swap as
required under paragraphs (1) and (2).
``(b) Duties of Certain Individuals.--Any individual or
entity that enters into a swap shall meet each requirement
described in subsection (c) if the individual or entity did
not--
``(1) clear the swap in accordance with section 2(h)(1); or
``(2) have the data regarding the swap accepted by a swap
data repository in accordance with rules (including
timeframes) adopted by the Commission under section 21.
``(c) Requirements.--An individual or entity described in
subsection (b) shall--
``(1) upon written request from the Commission, provide
reports regarding the swaps held by the individual or entity
to the Commission in such form and in such manner as the
Commission may request; and
``(2) maintain books and records pertaining to the swaps
held by the individual or entity in such form, in such
manner, and for such period as the Commission may require,
which shall be open to inspection by--
``(A) any representative of the Commission;
``(B) an appropriate prudential regulator;
``(C) the Securities and Exchange Commission;
``(D) the Financial Stability Oversight Council; and
``(E) the Department of Justice.
``(d) Identical Data.--In prescribing rules under this
section, the Commission shall require individuals and
entities described in subsection (b) to submit to the
Commission a report that contains data that is not less
comprehensive than the data required to be collected by swap
data repositories under section 21.''.

SEC. 730. LARGE SWAP TRADER REPORTING.

The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended
by adding after section 4s (as added by section 731) the
following:

``SEC. 4T. LARGE SWAP TRADER REPORTING.

``(a) Prohibition.--
``(1) In general.--Except as provided in paragraph (2), it
shall be unlawful for any person to enter into any swap that
the Commission determines to perform a significant price
discovery function with respect to registered entities if--
``(A) the person directly or indirectly enters into the
swap during any 1 day in an amount equal to or in excess of
such amount as shall be established periodically by the
Commission; and
``(B) the person directly or indirectly has or obtains a
position in the swap equal to or in excess of such amount as
shall be established periodically by the Commission.
``(2) Exception.--Paragraph (1) shall not apply if--
``(A) the person files or causes to be filed with the
properly designated officer of the Commission such reports
regarding any transactions or positions described in
subparagraphs (A) and (B) of paragraph (1) as the Commission
may require by rule or regulation; and
``(B) in accordance with the rules and regulations of the
Commission, the person keeps books and records of all such
swaps and any transactions and positions in any related
commodity traded on or subject to the rules of any board of
trade, and of cash or spot transactions in, inventories of,
and purchase and sale commitments of, such a commodity.
``(b) Requirements.--
``(1) In general.--Books and records described in
subsection (a)(2)(B) shall--
``(A) show such complete details concerning all
transactions and positions as the Commission may prescribe by
rule or regulation;
``(B) be open at all times to inspection and examination by
any representative of the Commission; and
``(C) be open at all times to inspection and examination by
the Securities and Exchange Commission, to the extent such
books and records relate to transactions in security-based
swap agreements (as that term is defined in section 3(a)(79)
of the Securities Exchange Act of 1934), and consistent with
the confidentiality and disclosure requirements of section 8.
``(2) Jurisdiction.--Nothing in paragraph (1) shall affect
the exclusive jurisdiction of the Commission to prescribe
recordkeeping and reporting requirements for large swap
traders under this section.
``(c) Applicability.--For purposes of this section, the
swaps, futures, and cash or spot transactions and positions
of any person shall include the swaps, futures, and cash or
spot transactions and positions of any persons directly or
indirectly controlled by the person.
``(d) Significant Price Discovery Function.--In making a
determination as to whether a swap performs or affects a
significant price discovery function with respect to
registered entities, the Commission shall consider the
factors described in section 4a(a)(3).''.

SEC. 731. REGISTRATION AND REGULATION OF SWAP DEALERS AND
MAJOR SWAP PARTICIPANTS.

The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended
by inserting after section 4r (as added by section 729) the
following:

``SEC. 4S. REGISTRATION AND REGULATION OF SWAP DEALERS AND
MAJOR SWAP PARTICIPANTS.

``(a) Registration.--
``(1) Swap dealers.--It shall be unlawful for any person to
act as a swap dealer unless the person is registered as a
swap dealer with the Commission.
``(2) Major swap participants.--It shall be unlawful for
any person to act as a major swap participant unless the
person is registered as a major swap participant with the
Commission.
``(b) Requirements.--
``(1) In general.--A person shall register as a swap dealer
or major swap participant by filing a registration
application with the Commission.
``(2) Contents.--
``(A) In general.--The application shall be made in such
form and manner as prescribed by the Commission, and shall
contain such information, as the Commission considers
necessary concerning the business in which the applicant is
or will be engaged.
``(B) Continual reporting.--A person that is registered as
a swap dealer or major swap participant shall continue to
submit to the Commission reports that contain such
information pertaining to the business of the person as the
Commission may require.
``(3) Expiration.--Each registration under this section
shall expire at such time as the Commission may prescribe by
rule or regulation.
``(4) Rules.--Except as provided in subsections (c), (e),
and (f), the Commission may prescribe rules applicable to
non-bank swap dealers and non-bank major swap participants,
including rules that limit the activities of swap dealers and
major swap participants.
``(5) Transition.--Rules under this section shall provide
for the registration of swap dealers and major swap
participants not later than 1 year after the date of
enactment of the Wall Street Transparency and Accountability
Act of 2010.
``(6) Statutory disqualification.--Except to the extent
otherwise specifically provided by rule, regulation, or
order, it shall be unlawful for a swap dealer or a major swap
participant to permit any person associated with a swap
dealer or a major swap participant who is subject to a
statutory disqualification to effect or be involved in
effecting swaps on behalf of the swap dealer or major swap
participant, if the swap dealer or major swap participant
knew, or in the exercise of reasonable care should have
known, of the statutory disqualification.
``(c) Dual Registration.--
``(1) Swap dealer.--Any person that is required to be
registered as a swap dealer under this section shall register
with the Commission regardless of whether the person also is
a depository institution or is registered with the Securities
and Exchange Commission as a security-based swap dealer.
``(2) Major swap participant.--Any person that is required
to be registered as a major swap participant under this
section shall register with the Commission regardless of
whether the person also is a depository institution or is
registered with the Securities and Exchange Commission as a
major security-based swap participant.
``(d) Rulemakings.--
``(1) In general.--The Commission shall adopt rules for
persons that are registered as swap dealers or major swap
participants under this section.
``(2) Exception for prudential requirements.--
``(A) In general.--The Commission may not prescribe rules
imposing prudential requirements on swap dealers or major
swap participants for which there is a prudential regulator.
``(B) Applicability.--Subparagraph (A) does not limit the
authority of the Commission to prescribe appropriate business
conduct, reporting, and recordkeeping requirements to protect
investors.
``(e) Capital and Margin Requirements.--
``(1) In general.--
``(A) Swap dealers and major swap participants that are
depository institutions.--Each registered swap dealer and
major swap participant that is a depository institution, as
that term is defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813), shall meet such minimum
capital requirements and minimum initial and variation margin
requirements as the appropriate Federal banking agency shall
by rule or regulation prescribe under paragraph (2)(A) to
help ensure the safety and soundness of the swap dealer or
major swap participant.
``(B) Swap dealers and major swap participants that are not
depository institutions.--Each registered swap dealer and
major swap participant that is not a depository institution,
as that term is defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813), shall meet such minimum
capital requirements and minimum initial and variation margin
requirements as the Commission and the Securities and
Exchange Commission shall by rule or regulation prescribe
under paragraph (2)(B) to help ensure the safety and
soundness of the swap dealer or major swap participant.
``(2) Rules.--

[[Page S2882]]

``(A) Swap dealers and major swap participants that are
depository institutions.--The appropriate Federal banking
agencies, in consultation with the Commission and the
Securities and Exchange Commission, shall adopt rules
imposing capital and margin requirements under this
subsection for swap dealers and major swap participants that
are depository institutions, as that term is defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813).
``(B) Swap dealers and major swap participants that are not
depository institutions.--The Commission shall adopt rules
imposing capital and margin requirements under this
subsection for swap dealers and major swap participants that
are not depository institutions, as that term is defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813).
``(3) Capital.--
``(A) Swap dealers and major swap participants that are
depository institutions.--The capital requirements prescribed
under paragraph (2)(A) for swap dealers and major swap
participants that are depository institutions shall contain--
``(i) a capital requirement that is greater than zero for
swaps that are cleared by a registered derivatives clearing
organization or a derivatives clearing organization that is
exempt from registration under section 5b(j); and
``(ii) to offset the greater risk to the swap dealer or
major swap participant and to the financial system arising
from the use of swaps that are not cleared, substantially
higher capital requirements for swaps that are not cleared by
a registered derivatives clearing organization or a
derivatives clearing organization that is exempt from
registration under section 5b(j) than for swaps that are
cleared.
``(B) Swap dealers and major swap participants that are not
depository institutions.--The capital requirements prescribed
under paragraph (2)(B) for swap dealers and major swap
participants that are not depository institutions shall be as
strict as or stricter than the capital requirements
prescribed for swap dealers and major swap participants that
are depository institutions under paragraph (2)(A).
``(C) Rule of construction.--
``(i) In general.--Nothing in this section shall limit, or
be construed to limit, the authority--

``(I) of the Commission to set financial responsibility
rules for a futures commission merchant or introducing broker
registered pursuant to section 4f(a) (except for section
4f(a)(3)) in accordance with section 4f(b); or
``(II) of the Securities and Exchange Commission to set
financial responsibility rules for a broker or dealer
registered pursuant to section 15(b) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o(b)) (except for section
15(b)(11) of that Act (15 U.S.C. 78o(b)(11)) in accordance
with section 15(c)(3) of the Securities Exchange Act of 1934
(15 U.S.C. 78o(c)(3)).

``(ii) Futures commission merchants and other dealers.--A
futures commission merchant, introducing broker, broker, or
dealer shall maintain sufficient capital to comply with the
stricter of any applicable capital requirements to which such
futures commission merchant, introducing broker, broker, or
dealer is subject to under this Act or the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.).
``(4) Margin.--
``(A) Swap dealers and major swap participants that are
depository institutions.--The appropriate Federal banking
agency for swap dealers and major swap participants that are
depository institutions shall impose both initial and
variation margin requirements in accordance with paragraph
(2)(A) on all swaps that are not cleared by a registered
derivatives clearing organization or a derivatives clearing
organization that is exempt from registration under section
5b(j) .
``(B) Swap dealers and major swap participants that are not
depository institutions.--The Commission and the Securities
and Exchange Commission shall impose both initial and
variation margin requirements in accordance with paragraph
(2)(B) for swap dealers and major swap participants that are
not depository institutions on all swaps that are not cleared
by a registered derivatives clearing organization or a
derivatives clearing organization that is exempt from
registration under section 5b(j). Any such initial and
variation margin requirements shall be as strict as or
stricter than the margin requirements prescribed under
paragraph (4)(A).
``(5) Margin requirements.--In prescribing margin
requirements under this subsection, the appropriate Federal
banking agency with respect to swap dealers and major swap
participants that are depository institutions and the
Commission with respect to swap dealers and major swap
participants that are not depository institutions may permit
the use of noncash collateral, as the agency or the
Commission determines to be consistent with--
``(A) preserving the financial integrity of markets trading
swaps; and
``(B) preserving the stability of the United States
financial system.
``(6) Comparability of capital and margin requirements.--
``(A) In general.--The appropriate Federal banking
agencies, the Commission, and the Securities and Exchange
Commission shall periodically (but not less frequently than
annually) consult on minimum capital requirements and minimum
initial and variation margin requirements.
``(B) Comparability.--The entities described in
subparagraph (A) shall, to the maximum extent practicable,
establish and maintain comparable minimum capital
requirements and minimum initial and variation margin
requirements, including the use of non cash collateral, for--
``(i) swap dealers; and
``(ii) major swap participants.
``(7) Requested margin.--If any party to a swap that is
exempt from the margin requirements of paragraph (4)(A)(i)
pursuant to the provisions of paragraph (4)(A)(ii), or from
the margin requirements of paragraph (4)(B)(i) pursuant to
the provisions of paragraph (4)(B)(ii), requests that such
swap be margined, then--
``(A) the exemption shall not apply; and
``(B) the counterparty to such swap shall provide the
requested margin.
``(8) Applicability with respect to counterparties.--
Paragraph (4) shall not apply to initial and variation margin
for swaps in which 1 of the counterparties is not--
``(A) a swap dealer;
``(B) a major swap participant; or
``(C) a financial entity as described in section
2(h)(9)(A)(ii), and such counterparty is eligible for and
utilizing the commercial end user clearing exemption under
section 2(h)(9).
``(f) Reporting and Recordkeeping.--
``(1) In general.--Each registered swap dealer and major
swap participant--
``(A) shall make such reports as are required by the
Commission by rule or regulation regarding the transactions
and positions and financial condition of the registered swap
dealer or major swap participant;
``(B)(i) for which there is a prudential regulator, shall
keep books and records of all activities related to the
business as a swap dealer or major swap participant in such
form and manner and for such period as may be prescribed by
the Commission by rule or regulation; and
``(ii) for which there is no prudential regulator, shall
keep books and records in such form and manner and for such
period as may be prescribed by the Commission by rule or
regulation; and
``(C) shall keep books and records described in
subparagraph (B) open to inspection and examination by any
representative of the Commission.
``(2) Rules.--The Commission shall adopt rules governing
reporting and recordkeeping for swap dealers and major swap
participants.
``(g) Daily Trading Records.--
``(1) In general.--Each registered swap dealer and major
swap participant shall maintain daily trading records of the
swaps of the registered swap dealer and major swap
participant and all related records (including related cash
or forward transactions) and recorded communications,
including electronic mail, instant messages, and recordings
of telephone calls, for such period as may be required by the
Commission by rule or regulation.
``(2) Information requirements.--The daily trading records
shall include such information as the Commission shall
require by rule or regulation.
``(3) Counterparty records.--Each registered swap dealer
and major swap participant shall maintain daily trading
records for each counterparty in a manner and form that is
identifiable with each swap transaction.
``(4) Audit trail.--Each registered swap dealer and major
swap participant shall maintain a complete audit trail for
conducting comprehensive and accurate trade reconstructions.
``(5) Rules.--The Commission shall adopt rules governing
daily trading records for swap dealers and major swap
participants.
``(h) Business Conduct Standards.--
``(1) In general.--Each registered swap dealer and major
swap participant shall conform with such business conduct
standards as may be prescribed by the Commission by rule or
regulation that relate to--
``(A) fraud, manipulation, and other abusive practices
involving swaps (including swaps that are offered but not
entered into);
``(B) diligent supervision of the business of the
registered swap dealer and major swap participant;
``(C) adherence to all applicable position limits; and
``(D) such other matters as the Commission determines to be
appropriate.
``(2) Special rule; fiduciary duties to certain entities.--
``(A) Governmental entities.--A swap dealer that provides
advice regarding, or offers to enter into, or enters into a
swap with a State, State agency, city, county, municipality,
or other political subdivision of a State or a Federal agency
shall have a fiduciary duty to the State, State agency, city,
county, municipality, or other political subdivision of a
State, or the Federal agency, as appropriate.
``(B) Pension plans; endowments; retirement plans.--A swap
dealer that provides advice regarding, or offers to enter
into, or enters into a swap with a pension plan, endowment,
or retirement plan shall have a fiduciary duty to the pension
plan, endowment, or retirement plan, as appropriate.
``(3) Business conduct requirements.--Business conduct
requirements adopted by the Commission shall--
``(A) establish the standard of care for a swap dealer or
major swap participant to

[[Page S2883]]

verify that any counterparty meets the eligibility standards
for an eligible contract participant;
``(B) require disclosure by the swap dealer or major swap
participant to any counterparty to the transaction (other
than a swap dealer, major swap participant, security-based
swap dealer, or major security-based swap participant) of--
``(i) information about the material risks and
characteristics of the swap;
``(ii) the source and amount of any fees or other material
remuneration that the swap dealer or major swap participant
would directly or indirectly expect to receive in connection
with the swap;
``(iii) any other material incentives or conflicts of
interest that the swap dealer or major swap participant may
have in connection with the swap; and
``(iv)(I) for cleared swaps, upon the request of the
counterparty, the daily mark from the appropriate derivatives
clearing organization; and
``(II) for uncleared swaps, the daily mark of the swap
dealer or the major swap participant;
``(C) establish a standard of conduct for a swap dealer or
major swap participant to communicate in a fair and balanced
manner based on principles of fair dealing and good faith;
``(D) establish a standard of conduct for a swap dealer or
major swap participant, with respect to a counterparty that
is an eligible contract participant within the meaning of
subclause (I) or (II) of clause (vii) of section 1a(18) of
this Act, to have a reasonable basis to believe that the
counterparty has an independent representative that--
``(i) has sufficient knowledge to evaluate the transaction
and risks;
``(ii) is not subject to a statutory disqualification;
``(iii) is independent of the swap dealer or major swap
participant;
``(iv) undertakes a duty to act in the best interests of
the counterparty it represents;
``(v) makes appropriate disclosures; and
``(vi) will provide written representations to the eligible
contract participant regarding fair pricing and the
appropriateness of the transaction; and
``(E) establish such other standards and requirements as
the Commission may determine are appropriate in the public
interest, for the protection of investors, or otherwise in
furtherance of the purposes of this Act.
``(4) Rules.--The Commission shall prescribe rules under
this subsection governing business conduct standards for swap
dealers and major swap participants.
``(i) Documentation and Back Office Standards.--
``(1) In general.--Each registered swap dealer and major
swap participant shall conform with such standards as may be
prescribed by the Commission by rule or regulation that
relate to timely and accurate confirmation, processing,
netting, documentation, and valuation of all swaps.
``(2) Rules.--The Commission shall adopt rules governing
documentation and back office standards for swap dealers and
major swap participants.
``(j) Duties.--Each registered swap dealer and major swap
participant at all times shall comply with the following
requirements:
``(1) Monitoring of trading.--The swap dealer or major swap
participant shall monitor its trading in swaps to prevent
violations of applicable position limits.
``(2) Risk management procedures.--The swap dealer or major
swap participant shall establish robust and professional risk
management systems adequate for managing the day-to-day
business of the swap dealer or major swap participant.
``(3) Disclosure of general information.--The swap dealer
or major swap participant shall disclose to the Commission
and to the prudential regulator for the swap dealer or major
swap participant, as applicable, information concerning--
``(A) terms and conditions of its swaps;
``(B) swap trading operations, mechanisms, and practices;
``(C) financial integrity protections relating to swaps;
and
``(D) other information relevant to its trading in swaps.
``(4) Ability to obtain information.--The swap dealer or
major swap participant shall--
``(A) establish and enforce internal systems and procedures
to obtain any necessary information to perform any of the
functions described in this section; and
``(B) provide the information to the Commission and to the
prudential regulator for the swap dealer or major swap
participant, as applicable, on request.
``(5) Conflicts of interest.--The swap dealer and major
swap participant shall implement conflict-of-interest systems
and procedures that--
``(A) establish structural and institutional safeguards to
ensure that the activities of any person within the firm
relating to research or analysis of the price or market for
any commodity or swap or acting in a role of providing
clearing activities or making determinations as to accepting
clearing customers are separated by appropriate informational
partitions within the firm from the review, pressure, or
oversight of persons whose involvement in pricing, trading,
or clearing activities might potentially bias their judgment
or supervision and contravene the core principles of open
access and the business conduct standards described in this
Act; and
``(B) address such other issues as the Commission
determines to be appropriate.
``(6) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, a swap
dealer or major swap participant shall not--
``(A) adopt any process or take any action that results in
any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on trading
or clearing.
``(k) Designation of Chief Compliance Officer.--
``(1) In general.--Each swap dealer and major swap
participant shall designate an individual to serve as a chief
compliance officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior officer
of the swap dealer or major swap participant;
``(B) review the compliance of the swap dealer or major
swap participant with respect to the swap dealer and major
swap participant requirements described in this section;
``(C) in consultation with the board of directors, a body
performing a function similar to the board, or the senior
officer of the organization, resolve any conflicts of
interest that may arise;
``(D) be responsible for administering each policy and
procedure that is required to be established pursuant to this
section;
``(E) ensure compliance with this Act (including
regulations) relating to swaps, including each rule
prescribed by the Commission under this section;
``(F) establish procedures for the remediation of
noncompliance issues identified by the chief compliance
officer through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(G) establish and follow appropriate procedures for the
handling, management response, remediation, retesting, and
closing of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules prescribed by
the Commission, the chief compliance officer shall annually
prepare and sign a report that contains a description of--
``(i) the compliance of the swap dealer or major swap
participant with respect to this Act (including regulations);
and
``(ii) each policy and procedure of the swap dealer or
major swap participant of the chief compliance officer
(including the code of ethics and conflict of interest
policies).
``(B) Requirements.--A compliance report under subparagraph
(A) shall--
``(i) accompany each appropriate financial report of the
swap dealer or major swap participant that is required to be
furnished to the Commission pursuant to this section; and
``(ii) include a certification that, under penalty of law,
the compliance report is accurate and complete.''.

SEC. 732. CONFLICTS OF INTEREST.

Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is
amended--
(1) by redesignating subsection (c) as subsection (e); and
(2) by inserting after subsection (b) the following:
``(c) Conflicts of Interest.--The Commission shall require
that futures commission merchants and introducing brokers
implement conflict-of-interest systems and procedures that--
``(1) establish structural and institutional safeguards to
ensure that the activities of any person within the firm
relating to research or analysis of the price or market for
any commodity are separated by appropriate informational
partitions within the firm from the review, pressure, or
oversight of persons whose involvement in trading or clearing
activities might potentially bias the judgment or supervision
of the persons; and
``(2) address such other issues as the Commission
determines to be appropriate.
``(d) Designation of Chief Compliance Officer.--
``(1) In general.--Each futures commission merchant shall
designate an individual to serve as a chief compliance
officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior officer
of the futures commission merchant;
``(B) review the compliance of the futures commission
merchant with respect to requirements described in this
section;
``(C) in consultation with the board of directors, a body
performing a function similar to the board, or the senior
officer of the organization, resolve any conflicts of
interest that may arise;
``(D) be responsible for administering each policy and
procedure that is required to be established pursuant to this
section;
``(E) ensure compliance with this Act (including
regulations and each rule prescribed by the Commission under
this section) relating, but not limited, to--
``(i) contracts of sale of a commodity for future delivery;
``(ii) options on the contracts described in clause (i);
``(iii) commodity options;
``(iv) retail commodity transactions;
``(v) security futures products;
``(vi) leverage contracts; and

[[Page S2884]]

``(vii) swaps;
``(F) establish procedures for the remediation of
noncompliance issues identified by the chief compliance
officer through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(G) establish and follow appropriate procedures for the
handling, management response, remediation, retesting, and
closing of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules prescribed by
the Commission, the chief compliance officer shall annually
prepare and sign a report that contains a description of--
``(i) the compliance of the futures commission merchant
with respect to this Act (including regulations); and
``(ii) each policy and procedure of the futures commission
merchant of the chief compliance officer (including the code
of ethics and conflict of interest policies).
``(B) Requirements.--A compliance report under subparagraph
(A) shall--
``(i) accompany each appropriate financial report of the
futures commission merchant that is required to be furnished
to the Commission pursuant to this section; and
``(ii) include a certification that, under penalty of law,
the compliance report is accurate and complete.''.

SEC. 733. SWAP EXECUTION FACILITIES.

The Commodity Exchange Act is amended by inserting after
section 5g (7 U.S.C. 7b-2) the following:

``SEC. 5H. SWAP EXECUTION FACILITIES.

``(a) Registration.--
``(1) In general.--No person may operate a facility for the
trading or processing of swaps unless the facility is
registered as a swap execution facility or as a designated
contract market under this section.
``(2) Dual registration.--Any person that is registered as
a swap execution facility under this section shall register
with the Commission regardless of whether the person also is
registered with the Securities and Exchange Commission as a
swap execution facility.
``(b) Trading and Trade Processing.--A swap execution
facility that is registered under subsection (a) may--
``(1) make available for trading any swap; and
``(2) facilitate trade processing of any swap.
``(c) Identification of Facility Used to Trade Swaps by
Contract Markets.--A board of trade that operates a contract
market shall, to the extent that the board of trade also
operates a swap execution facility and uses the same
electronic trade execution system for listing and executing
trades of swaps on or through the contract market and the
swap execution facility, identify whether the electronic
trading of such swaps is taking place on or through the
contract market or the swap execution facility.
``(d) Core Principles for Swap Execution Facilities.--
``(1) Compliance with core principles.--
``(A) In general.--To be registered, and maintain
registration, as a swap execution facility, the swap
execution facility shall comply with--
``(i) the core principles described in this subsection; and
``(ii) any requirement that the Commission may impose by
rule or regulation pursuant to section 8a(5).
``(B) Reasonable discretion of swap execution facility.--
Unless otherwise determined by the Commission by rule or
regulation, a swap execution facility described in
subparagraph (A) shall have reasonable discretion in
establishing the manner in which the swap execution facility
complies with the core principles described in this
subsection.
``(2) Compliance with rules.--A swap execution facility
shall--
``(A) monitor and enforce compliance with any rule of the
swap execution facility, including--
``(i) the terms and conditions of the swaps traded or
processed on or through the swap execution facility; and
``(ii) any limitation on access to the swap execution
facility;
``(B) establish and enforce trading, trade processing, and
participation rules that will deter abuses and have the
capacity to detect, investigate, and enforce those rules,
including means--
``(i) to provide market participants with impartial access
to the market; and
``(ii) to capture information that may be used in
establishing whether rule violations have occurred;
``(C) establish rules governing the operation of the
facility, including rules specifying trading procedures to be
used in entering and executing orders traded or posted on the
facility, including block trades; and
``(D) provide by its rules that when a swap dealer or major
swap participant enters into or facilitates a swap that is
subject to the mandatory clearing requirement of section
2(h)(2)(F), the swap dealer or major swap participant shall
be responsible for compliance with the mandatory trading
requirement of section 113(d) of the Wall Street Transparency
and Accountability Act of 2010.
``(3) Swaps not readily susceptible to manipulation.--The
swap execution facility shall permit trading only in swaps
that are not readily susceptible to manipulation.
``(4) Monitoring of trading and trade processing.--The swap
execution facility shall--
``(A) establish and enforce rules or terms and conditions
defining, or specifications detailing--
``(i) trading procedures to be used in entering and
executing orders traded on or through the facilities of the
swap execution facility; and
``(ii) procedures for trade processing of swaps on or
through the facilities of the swap execution facility; and
``(B) monitor trading in swaps to prevent manipulation,
price distortion, and disruptions of the delivery or cash
settlement process through surveillance, compliance, and
disciplinary practices and procedures, including methods for
conducting real-time monitoring of trading and comprehensive
and accurate trade reconstructions.
``(5) Ability to obtain information.--The swap execution
facility shall--
``(A) establish and enforce rules that will allow the
facility to obtain any necessary information to perform any
of the functions described in this section;
``(B) provide the information to the Commission on request;
and
``(C) have the capacity to carry out such international
information-sharing agreements as the Commission may require.
``(6) Position limits or accountability.--
``(A) In general.--To reduce the potential threat of market
manipulation or congestion, especially during trading in the
delivery month, a swap execution facility that is a trading
facility shall adopt for each of the contracts of the
facility, as is necessary and appropriate, position
limitations or position accountability for speculators.
``(B) Position limits.--For any contract that is subject to
a position limitation established by the Commission pursuant
to section 4a(a), the swap execution facility shall set its
position limitation at a level no higher than the Commission
limitation.
``(C) Position enforcement.--For any contract that is
subject to a position limitation established by the
Commission pursuant to section 4a(a), a swap execution
facility shall reject any proposed swap transaction if, based
on information readily available to a swap execution
facility, any proposed swap transaction would cause a swap
execution facility customer that would be a party to such
swap transaction to exceed such position limitation.
``(7) Financial integrity of transactions.--The swap
execution facility shall establish and enforce rules and
procedures for ensuring the financial integrity of swaps
entered on or through the facilities of the swap execution
facility, including the clearance and settlement of the swaps
pursuant to section 2(h)(1).
``(8) Emergency authority.--The swap execution facility
shall adopt rules to provide for the exercise of emergency
authority, in consultation or cooperation with the
Commission, as is necessary and appropriate, including the
authority to liquidate or transfer open positions in any swap
or to suspend or curtail trading in a swap.
``(9) Timely publication of trading information.--
``(A) In general.--The swap execution facility shall make
public timely information on price, trading volume, and other
trading data on swaps to the extent prescribed by the
Commission.
``(B) Capacity of swap execution facility.--The swap
execution facility shall be required to have the capacity to
electronically capture trade information with respect to
transactions executed on the facility.
``(10) Recordkeeping and reporting.--
``(A) In general.--A swap execution facility shall--
``(i) maintain records of all activities relating to the
business of the facility, including a complete audit trail,
in a form and manner acceptable to the Commission for a
period of 5 years; and
``(ii) report to the Commission, in a form and manner
acceptable to the Commission, such information as the
Commission determines to be necessary or appropriate for the
Commission to perform the duties of the Commission under this
Act.
``(B) Requirements.--The Commission shall adopt data
collection and reporting requirements for swap execution
facilities that are comparable to corresponding requirements
for derivatives clearing organizations and swap data
repositories.
``(11) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, the swap
execution facility shall not--
``(A) adopt any rules or taking any actions that result in
any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on trading
or clearing.
``(12) Conflicts of interest.--The swap execution facility
shall--
``(A) establish and enforce rules to minimize conflicts of
interest in its decision-making process; and
``(B) establish a process for resolving the conflicts of
interest.
``(13) Financial resources.--
``(A) In general.--The swap execution facility shall have
adequate financial, operational, and managerial resources to
discharge each responsibility of the swap execution facility.
``(B) Determination of resource adequacy.--The financial
resources of a swap execution facility shall be considered to
be

[[Page S2885]]

adequate if the value of the financial resources exceeds the
total amount that would enable the swap execution facility to
cover the operating costs of the swap execution facility for
a 1-year period, as calculated on a rolling basis.
``(14) System safeguards.--The swap execution facility
shall--
``(A) establish and maintain a program of risk analysis and
oversight to identify and minimize sources of operational
risk, through the development of appropriate controls and
procedures, and automated systems, that--
``(i) are reliable and secure; and
``(ii) have adequate scalable capacity;
``(B) establish and maintain emergency procedures, backup
facilities, and a plan for disaster recovery that are
designed to allow for--
``(i) the timely recovery and resumption of operations; and
``(ii) the fulfillment of the responsibilities and
obligation of the swap execution facility; and
``(C) periodically conduct tests to verify that the backup
resources of the swap execution facility are sufficient to
ensure continued--
``(i) order processing and trade matching;
``(ii) price reporting;
``(iii) market surveillance and
``(iv) maintenance of a comprehensive and accurate audit
trail.
``(15) Designation of chief compliance officer.--
``(A) In general.--Each swap execution facility shall
designate an individual to serve as a chief compliance
officer.
``(B) Duties.--The chief compliance officer shall--
``(i) report directly to the board or to the senior officer
of the facility;
``(ii) review compliance with the core principles in this
subsection;
``(iii) in consultation with the board of the facility, a
body performing a function similar to that of a board, or the
senior officer of the facility, resolve any conflicts of
interest that may arise;
``(iv) be responsible for establishing and administering
the policies and procedures required to be established
pursuant to this section;
``(v) ensure compliance with this Act and the rules and
regulations issued under this Act, including rules prescribed
by the Commission pursuant to this section; and
``(vi) establish procedures for the remediation of
noncompliance issues found during compliance office reviews,
look backs, internal or external audit findings, self-
reported errors, or through validated complaints.
``(C) Requirements for procedures.--In establishing
procedures under subparagraph (B)(vi), the chief compliance
officer shall design the procedures to establish the
handling, management response, remediation, retesting, and
closing of noncompliance issues.
``(D) Annual reports.--
``(i) In general.--In accordance with rules prescribed by
the Commission, the chief compliance officer shall annually
prepare and sign a report that contains a description of--

``(I) the compliance of the swap execution facility with
this Act; and
``(II) the policies and procedures, including the code of
ethics and conflict of interest policies, of the swap
execution facility.

``(ii) Requirements.--The chief compliance officer shall--

``(I) submit each report described in clause (i) with the
appropriate financial report of the swap execution facility
that is required to be submitted to the Commission pursuant
to this section; and
``(II) include in the report a certification that, under
penalty of law, the report is accurate and complete.

``(e) Exemptions.--The Commission may exempt, conditionally
or unconditionally, a swap execution facility from
registration under this section if the Commission finds that
the facility is subject to comparable, comprehensive
supervision and regulation on a consolidated basis by the
Securities and Exchange Commission, a prudential regulator,
or the appropriate governmental authorities in the home
country of the facility.
``(f) Rules.--The Commission shall prescribe rules
governing the regulation of alternative swap execution
facilities under this section.''.

SEC. 734. DERIVATIVES TRANSACTION EXECUTION FACILITIES AND
EXEMPT BOARDS OF TRADE.

(a) In General.--Sections 5a and 5d of the Commodity
Exchange Act (7 U.S.C. 7a, 7a-3) are repealed.
(b) Conforming Amendments.--
(1) Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is
amended--
(A) in subsection (a)(1)(A), in the first sentence, by
striking ``or 5a''; and
(B) in paragraph (2) of subsection (g) (as redesignated by
section 723(a)(1)(B)), by striking ``section 5a of this Act''
and all that follows through ``5d of this Act'' and inserting
``section 5b of this Act''.
(2) Section 6(g)(1)(A) of the Securities Exchange Act of
1934 (15 U.S.C. 78f(g)(1)(A)) is amended--
(A) by striking ``that--'' and all that follows through
``(i) has been designated'' and inserting ``that has been
designated'';
(B) by striking ``; or'' and inserting ``; and'' and
(C) by striking clause (ii).

SEC. 735. DESIGNATED CONTRACT MARKETS.

(a) Criteria for Designation.--Section 5 of the Commodity
Exchange Act (7 U.S.C. 7) is amended by striking subsection
(b).
(b) Core Principles for Contract Markets.--Section 5 of the
Commodity Exchange Act (7 U.S.C. 7) is amended by striking
subsection (d) and inserting the following:
``(d) Core Principles for Contract Markets.--
``(1) Designation as contract market.--
``(A) In general.--To be designated, and maintain a
designation, as a contract market, a board of trade shall
comply with--
``(i) any core principle described in this subsection; and
``(ii) any requirement that the Commission may impose by
rule or regulation pursuant to section 8a(5).
``(B) Reasonable discretion of contract market.--Unless
otherwise determined by the Commission by rule or regulation,
a board of trade described in subparagraph (A) shall have
reasonable discretion in establishing the manner in which the
board of trade complies with the core principles described in
this subsection.
``(2) Compliance with rules.--
``(A) In general.--The board of trade shall establish,
monitor, and enforce compliance with the rules of the
contract market, including--
``(i) access requirements;
``(ii) the terms and conditions of any contracts to be
traded on the contract market; and
``(iii) rules prohibiting abusive trade practices on the
contract market.
``(B) Capacity of contract market.--The board of trade
shall have the capacity to detect, investigate, and apply
appropriate sanctions to any person that violates any rule of
the contract market.
``(C) Requirement of rules.--The rules of the contract
market shall provide the board of trade with the ability and
authority to obtain any necessary information to perform any
function described in this subsection, including the capacity
to carry out such international information-sharing
agreements as the Commission may require.
``(3) Contracts not readily subject to manipulation.--The
board of trade shall list on the contract market only
contracts that are not readily susceptible to manipulation.
``(4) Prevention of market disruption.--The board of trade
shall have the capacity and responsibility to prevent
manipulation, price distortion, and disruptions of the
delivery or cash-settlement process through market
surveillance, compliance, and enforcement practices and
procedures, including--
``(A) methods for conducting real-time monitoring of
trading; and
``(B) comprehensive and accurate trade reconstructions.
``(5) Position limitations or accountability.--
``(A) In general.--To reduce the potential threat of market
manipulation or congestion (especially during trading in the
delivery month), the board of trade shall adopt for each
contract of the board of trade, as is necessary and
appropriate, position limitations or position accountability
for speculators.
``(B) Maximum allowable position limitation.--For any
contract that is subject to a position limitation established
by the Commission pursuant to section 4a(a), the board of
trade shall set the position limitation of the board of trade
at a level not higher than the position limitation
established by the Commission.
``(6) Emergency authority.--The board of trade, in
consultation or cooperation with the Commission, shall adopt
rules to provide for the exercise of emergency authority, as
is necessary and appropriate, including the authority--
``(A) to liquidate or transfer open positions in any
contract;
``(B) to suspend or curtail trading in any contract; and
``(C) to require market participants in any contract to
meet special margin requirements.
``(7) Availability of general information.--The board of
trade shall make available to market authorities, market
participants, and the public accurate information
concerning--
``(A) the terms and conditions of the contracts of the
contract market; and
``(B)(i) the rules, regulations, and mechanisms for
executing transactions on or through the facilities of the
contract market; and
``(ii) the rules and specifications describing the
operation of the contract market's--
``(I) electronic matching platform; or
``(II) trade execution facility.
``(8) Daily publication of trading information.--The board
of trade shall make public daily information on settlement
prices, volume, open interest, and opening and closing ranges
for actively traded contracts on the contract market.
``(9) Execution of transactions.--
``(A) In general.--The board of trade shall provide a
competitive, open, and efficient market and mechanism for
executing transactions that protects the price discovery
process of trading in the centralized market of the board of
trade.
``(B) Rules.--The rules of the board of trade may
authorize, for bona fide business purposes--
``(i) transfer trades or office trades;
``(ii) an exchange of--

``(I) futures in connection with a cash commodity
transaction;
``(II) futures for cash commodities; or
``(III) futures for swaps; or

[[Page S2886]]

``(iii) a futures commission merchant, acting as principal
or agent, to enter into or confirm the execution of a
contract for the purchase or sale of a commodity for future
delivery if the contract is reported, recorded, or cleared in
accordance with the rules of the contract market or a
derivatives clearing organization.
``(10) Trade information.--The board of trade shall
maintain rules and procedures to provide for the recording
and safe storage of all identifying trade information in a
manner that enables the contract market to use the
information--
``(A) to assist in the prevention of customer and market
abuses; and
``(B) to provide evidence of any violations of the rules of
the contract market.
``(11) Financial integrity of transactions.--The board of
trade shall establish and enforce--
``(A) rules and procedures for ensuring the financial
integrity of transactions entered into on or through the
facilities of the contract market (including the clearance
and settlement of the transactions with a derivatives
clearing organization); and
``(B) rules to ensure--
``(i) the financial integrity of any--

``(I) futures commission merchant; and
``(II) introducing broker; and

``(ii) the protection of customer funds.
``(12) Protection of markets and market participants.--The
board of trade shall establish and enforce rules--
``(A) to protect markets and market participants from
abusive practices committed by any party, including abusive
practices committed by a party acting as an agent for a
participant; and
``(B) to promote fair and equitable trading on the contract
market.
``(13) Disciplinary procedures.--The board of trade shall
establish and enforce disciplinary procedures that authorize
the board of trade to discipline, suspend, or expel members
or market participants that violate the rules of the board of
trade, or similar methods for performing the same functions,
including delegation of the functions to third parties.
``(14) Dispute resolution.--The board of trade shall
establish and enforce rules regarding, and provide facilities
for alternative dispute resolution as appropriate for, market
participants and any market intermediaries.
``(15) Governance fitness standards.--The board of trade
shall establish and enforce appropriate fitness standards for
directors, members of any disciplinary committee, members of
the contract market, and any other person with direct access
to the facility (including any party affiliated with any
person described in this paragraph).
``(16) Conflicts of interest.--The board of trade shall
establish and enforce rules--
``(A) to minimize conflicts of interest in the decision-
making process of the contract market; and
``(B) to establish a process for resolving conflicts of
interest described in subparagraph (A).
``(17) Composition of governing boards of contract
markets.--The governance arrangements of the board of trade
shall be designed to promote the objectives of market
participants.
``(18) Recordkeeping.--The board of trade shall maintain
records of all activities relating to the business of the
contract market--
``(A) in a form and manner that is acceptable to the
Commission; and
``(B) for a period of at least 5 years.
``(19) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, the board of
trade shall not--
``(A) adopt any rule or taking any action that results in
any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on trading
on the contract market.
``(20) System safeguards.--The board of trade shall--
``(A) establish and maintain a program of risk analysis and
oversight to identify and minimize sources of operational
risk, through the development of appropriate controls and
procedures, and the development of automated systems, that
are reliable, secure, and have adequate scalable capacity;
``(B) establish and maintain emergency procedures, backup
facilities, and a plan for disaster recovery that allow for
the timely recovery and resumption of operations and the
fulfillment of the responsibilities and obligations of the
board of trade; and
``(C) periodically conduct tests to verify that backup
resources are sufficient to ensure continued order processing
and trade matching, price reporting, market surveillance, and
maintenance of a comprehensive and accurate audit trail.
``(21) Financial resources.--
``(A) In general.--The board of trade shall have adequate
financial, operational, and managerial resources to discharge
each responsibility of the board of trade.
``(B) Determination of adequacy.--The financial resources
of the board of trade shall be considered to be adequate if
the value of the financial resources exceeds the total amount
that would enable the contract market to cover the operating
costs of the contract market for a 1-year period, as
calculated on a rolling basis.''.

SEC. 736. MARGIN.

Section 8a(7) of the Commodity Exchange Act (7 U.S.C.
12a(7)) is amended--
(1) in subparagraph (C), by striking ``, excepting the
setting of levels of margin'';
(2) by redesignating subparagraphs (D) through (F) as
subparagraphs (E) through (G), respectively; and
(3) by inserting after subparagraph (C) the following:
``(D) margin requirements, provided that the rules,
regulations, or orders shall--
``(i) be limited to protecting the financial integrity of
the derivatives clearing organization;
``(ii) be designed for risk management purposes to protect
the financial integrity of transactions; and
``(iii) not set specific margin amounts;''.

SEC. 737. POSITION LIMITS.

(a) Aggregate Position Limits.--Section 4a(a) of the
Commodity Exchange Act (7 U.S.C. 6a(a)) is amended--
(1) by inserting after ``(a)'' the following:
``(1) In general.--'';
(2) in the first sentence, by striking ``on electronic
trading facilities with respect to a significant price
discovery contract'' and inserting ``swaps that perform or
affect a significant price discovery function with respect to
registered entities'';
(3) in the second sentence--
(A) by inserting ``, including any group or class of
traders,'' after ``held by any person''; and
(B) by striking ``on an electronic trading facility with
respect to a significant price discovery contract,'' and
inserting ``swaps traded on or subject to the rules of an
swaps execution facility, or swaps not traded on or subject
to the rules of an swaps execution facility that perform a
significant price discovery function with respect to a
registered entity,''; and
(4) by adding at the end the following:
``(2) Aggregate position limits.--The Commission shall, by
rule or regulation, establish limits (including related hedge
exemption provisions) on the aggregate number or amount of
positions in contracts based on the same underlying commodity
(as defined by the Commission) that may be held by any
person, including any group or class of traders, for each
month across--
``(A) contracts listed by designated contract markets;
``(B) with respect to an agreement, contract, or
transaction that settles against, or in relation to, any
price (including the daily or final settlement price) of 1 or
more contracts listed for trading on a registered entity,
contracts traded on a foreign board of trade that provides
members or other participants located in the United States
with direct access to the electronic trading and order
matching system of the foreign board of trade;
``(C) swaps traded on or subject to the rules of a swap
execution facility; and
``(D) swaps not traded on or subject to the rules of a swap
execution facility that perform or affect a significant price
discovery function with respect to a registered entity.
``(3) Significant price discovery function.--In making a
determination as to whether a swap performs or affects a
significant price discovery function with respect to
registered entities, the Commission shall consider, as
appropriate, the following factors:
``(A) Price linkage.--The extent to which the swap uses or
otherwise relies on a daily or final settlement price, or
other major price parameter, of another contract traded on a
registered entity based on the same underlying commodity, to
value a position, transfer or convert a position, financially
settle a position, or close out a position.
``(B) Arbitrage.--The extent to which the price for the
swap is sufficiently related to the price of another contract
traded on a registered entity based on the same underlying
commodity so as to permit market participants to effectively
arbitrage between the markets by simultaneously maintaining
positions or executing trades in the swaps on a frequent and
recurring basis.
``(C) Material price reference.--The extent to which, on a
frequent and recurring basis, bids, offers, or transactions
in a contract traded on a registered entity are directly
based on, or are determined by referencing, the price
generated by the swap.
``(D) Material liquidity.--The extent to which the volume
of swaps being traded in the commodity is sufficient to have
a material effect on another contract traded on a registered
entity.
``(E) Other material factors.--Such other material factors
as the Commission specifies by rule or regulation as relevant
to determine whether a swap serves a significant price
discovery function with respect to a regulated market.
``(4) Exemptions.--The Commission, by rule, regulation, or
order, may exempt, conditionally or unconditionally, any
person or class of persons, any swap or class of swaps, or
any transaction or class of transactions from any requirement
that the Commission establishes under this section with
respect to position limits.''.
(b) Conforming Amendments.--Section 4a(b) of the Commodity
Exchange Act (7 U.S.C. 6a(b)) is amended--
(1) in paragraph (1), by striking ``or derivatives
transaction execution facility or facilities or electronic
trading facility'' and inserting ``or swap execution facility
or facilities''; and
(2) in paragraph (2), by striking ``or derivatives
transaction execution facility or facilities or electronic
trading facility'' and inserting ``or swap execution
facility''.

[[Page S2887]]

SEC. 738. FOREIGN BOARDS OF TRADE.

(a) In General.--Section 4(b) of the Commodity Exchange Act
(7 U.S.C. 6(b)) is amended--
(1) in the first sentence, by striking ``The Commission''
and inserting the following:
``(2) Persons located in the united states.--
``(A) In general.--The Commission'';
(2) in the second sentence, by striking ``Such rules and
regulations'' and inserting the following:
``(B) Different requirements.--Rules and regulations
described in subparagraph (A)'';
(3) in the third sentence--
(A) by striking ``No rule or regulation'' and inserting the
following:
``(C) Prohibition.--Except as provided in paragraphs (1)
and (2), no rule or regulation'';
(B) by striking ``that (1) requires'' and inserting the
following: ``that--
``(i) requires''; and
(C) by striking ``market, or (2) governs'' and inserting
the following: ``market; or
``(ii) governs''; and
(4) by inserting before paragraph (2) (as designated by
paragraph (1)) the following:
``(1) Foreign boards of trade.--
``(A) In general.--It shall be unlawful for a foreign board
of trade to provide to the members of the foreign board of
trade or other participants located in the United States
direct access to the electronic trading and order-matching
system of the foreign board of trade with respect to an
agreement, contract, or transaction that settles against any
price (including the daily or final settlement price) of 1 or
more contracts listed for trading on a registered entity,
unless the Commission determines that--
``(i) the foreign board of trade makes public daily trading
information regarding the agreement, contract, or transaction
that is comparable to the daily trading information published
by the registered entity for the 1 or more contracts against
which the agreement, contract, or transaction traded on the
foreign board of trade settles; and
``(ii) the foreign board of trade (or the foreign futures
authority that oversees the foreign board of trade)--

``(I) adopts position limits (including related hedge
exemption provisions) for the agreement, contract, or
transaction that are comparable to the position limits
(including related hedge exemption provisions) adopted by the
registered entity for the 1 or more contracts against which
the agreement, contract, or transaction traded on the foreign
board of trade settles;
``(II) has the authority to require or direct market
participants to limit, reduce, or liquidate any position the
foreign board of trade (or the foreign futures authority that
oversees the foreign board of trade) determines to be
necessary to prevent or reduce the threat of price
manipulation, excessive speculation as described in section
4a, price distortion, or disruption of delivery or the cash
settlement process;
``(III) agrees to promptly notify the Commission, with
regard to the agreement, contract, or transaction that
settles against any price (including the daily or final
settlement price) of 1 or more contracts listed for trading
on a registered entity, of any change regarding--

``(aa) the information that the foreign board of trade will
make publicly available;
``(bb) the position limits that the foreign board of trade
or foreign futures authority will adopt and enforce;
``(cc) the position reductions required to prevent
manipulation, excessive speculation as described in section
4a, price distortion, or disruption of delivery or the cash
settlement process; and
``(dd) any other area of interest expressed by the
Commission to the foreign board of trade or foreign futures
authority;

``(IV) provides information to the Commission regarding
large trader positions in the agreement, contract, or
transaction that is comparable to the large trader position
information collected by the Commission for the 1 or more
contracts against which the agreement, contract, or
transaction traded on the foreign board of trade settles; and
``(V) provides the Commission such information as is
necessary to publish reports on aggregate trader positions
for the agreement, contract, or transaction traded on the
foreign board of trade that are comparable to such reports on
aggregate trader positions for the 1 or more contracts
against which the agreement, contract, or transaction traded
on the foreign board of trade settles.

``(B) Existing foreign boards of trade.--Subparagraph (A)
shall not be effective with respect to any foreign board of
trade to which, prior to the date of enactment of this
paragraph, the Commission granted direct access permission
until the date that is 180 days after that date of
enactment.''.
(b) Liability of Registered Persons Trading on a Foreign
Board of Trade.--Section 4 of the Commodity Exchange Act (7
U.S.C. 6) is amended--
(1) in subsection (a), in the matter preceding paragraph
(1), by inserting ``or by subsection (e)'' after ``Unless
exempted by the Commission pursuant to subsection (c)''; and
(2) by adding at the end the following:
``(e) Liability of Registered Persons Trading on a Foreign
Board of Trade.--A person registered with the Commission, or
exempt from registration by the Commission, under this Act
may not be found to have violated subsection (a) with respect
to a transaction in, or in connection with, a contract of
sale of a commodity for future delivery if the person has
reason to believe that the transaction and the contract is
made on or subject to the rules of a foreign board of trade
that has complied with paragraphs (1) and (2) of subsection
(b).''.
(c) Contract Enforcement for Foreign Futures Contracts.--
Section 22(a) of the Commodity Exchange Act (7 U.S.C. 25(a))
(as amended by section 739) is amended by adding at the end
the following:
``(6) Contract enforcement for foreign futures contracts.--
A contract of sale of a commodity for future delivery traded
or executed on or through the facilities of a board of trade,
exchange, or market located outside the United States for
purposes of section 4(a) shall not be void, voidable, or
unenforceable, and a party to such a contract shall not be
entitled to rescind or recover any payment made with respect
to the contract, based on the failure of the foreign board of
trade to comply with any provision of this Act.''.

SEC. 739. LEGAL CERTAINTY FOR SWAPS.

Section 22(a) of the Commodity Exchange Act (7 U.S.C.
25(a)) is amended by striking paragraph (4) and inserting the
following:
``(4) Contract enforcement between eligible
counterparties.--
``(A) In general.--No hybrid instrument sold to any
investor shall be void, voidable, or unenforceable, and no
party to a hybrid instrument shall be entitled to rescind, or
recover any payment made with respect to, the hybrid
instrument under this section or any other provision of
Federal or State law, based solely on the failure of the
hybrid instrument to comply with the terms or conditions of
section 2(f) or regulations of the Commission.
``(B) Swaps.--No agreement, contract, or transaction
between eligible contract participants or persons reasonably
believed to be eligible contract participants shall be void,
voidable, or unenforceable, and no party to an agreement,
contract, or transaction shall be entitled to rescind, or
recover any payment made with respect to, the agreement,
contract, or transaction under this section or any other
provision of Federal or State law, based solely on the
failure of the agreement, contract, or transaction--
``(i) to meet the definition of a swap under section 1a; or
``(ii) to be cleared in accordance with section 2(h)(1).
``(5) Legal certainty for long-term swaps entered into
before the date of enactment of the wall street transparency
and accountability act of 2010.--
``(A) In general.--Any swap entered into before the date of
enactment of the Wall Street Transparency and Accountability
Act of 2010, the terms of which have not expired as of the
date of enactment, shall not be subject to the mandatory
clearing requirements under this Act.
``(B) Effect on swaps.--Unless specifically reserved in the
applicable bilateral trading agreement, neither the enactment
of the Wall Street Transparency and Accountability Act of
2010, nor any requirement under that Act or an amendment made
by that Act, shall constitute a termination event, force
majeure, illegality, increased costs, regulatory change, or
similar event under a bilateral trading agreement (including
any related credit support arrangement) that would permit a
party to terminate, renegotiate, modify, amend, or supplement
1 or more transactions under the bilateral trading agreement.
``(C) Position limits.--Any position limit established
under the Wall Street Transparency and Accountability Act of
2010 shall not apply to a position acquired in good faith
prior to the effective date of any rule, regulation, or order
under the Act that establishes the position limit; provided,
however, that such positions shall be attributed to the
trader if the trader's position is increased after the
effective date such position limit rule, regulation, or
order.''.

SEC. 740. MULTILATERAL CLEARING ORGANIZATIONS.

Sections 408 and 409 of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (12 U.S.C. 4421, 4422)
are repealed.

SEC. 741. ENFORCEMENT.

(a) Enforcement Authority.--The Commodity Exchange Act is
amended by inserting after section 4b (7 U.S.C. 6b) the
following:

``SEC. 4B-1. ENFORCEMENT AUTHORITY.

``(a) Commission.--Except as provided in subsections (b),
(c), and (d), the Commission shall have primary authority to
enforce the amendments made by the Wall Street Transparency
and Accountability Act of 2010 with respect to any person.
``(b) Appropriate Federal Banking Agencies.--The
appropriate Federal banking agency for swap dealers or major
swap participants that are depository institutions, as that
term is defined under section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813), shall have exclusive
authority to enforce the provisions of section 4s(e) and
other prudential requirements of this Act, with respect to
depository institutions that are swap dealers or major swap
participants.
``(c) Referrals.--
``(1) Prudential regulators.--If the prudential regulator
for a swap dealer or major swap participant has cause to
believe that the swap dealer or major swap participant, or
any affiliate or division of the swap dealer or major swap
participant, may have engaged in conduct that constitutes a
violation

[[Page S2888]]

of the nonprudential requirements of this Act (including
section 4s or rules adopted by the Commission under that
section), the prudential regulator shall promptly notify the
Commission in a written report that includes--
``(A) a request that the Commission initiate an enforcement
proceeding under this Act; and
``(B) an explanation of the facts and circumstances that
led to the preparation of the written report.
``(2) Commission.--If the Commission has cause to believe
that a swap dealer or major swap participant that has a
prudential regulator may have engaged in conduct that
constitutes a violation of any prudential requirement of
section 4s or rules adopted by the Commission under that
section, the Commission may notify the prudential regulator
of the conduct in a written report that includes--
``(A) a request that the prudential regulator initiate an
enforcement proceeding under this Act or any other Federal
law (including regulations); and
``(B) an explanation of the concerns of the Commission, and
a description of the facts and circumstances, that led to the
preparation of the written report.
``(d) Backstop Enforcement Authority.--
``(1) Initiation of enforcement proceeding by prudential
regulator.--If the Commission does not initiate an
enforcement proceeding before the end of the 90-day period
beginning on the date on which the Commission receives a
written report under subsection (c)(1), the prudential
regulator may initiate an enforcement proceeding.
``(2) Initiation of enforcement proceeding by commission.--
If the prudential regulator does not initiate an enforcement
proceeding before the end of the 90-day period beginning on
the date on which the prudential regulator receives a written
report under subsection (c)(2), the Commission may initiate
an enforcement proceeding.''.
(b) Conforming Amendments.--
(1) Section 4b of the Commodity Exchange Act (7 U.S.C. 6b)
is amended--
(A) in subsection (a)(2), by striking ``or other agreement,
contract, or transaction subject to paragraphs (1) and (2) of
section 5a(g),'' and inserting ``or swap,'';
(B) in subsection (b), by striking ``or other agreement,
contract or transaction subject to paragraphs (1) and (2) of
section 5a(g),'' and inserting ``or swap,''; and
(C) by adding at the end the following:
``(e) It shall be unlawful for any person, directly or
indirectly, by the use of any means or instrumentality of
interstate commerce, or of the mails, or of any facility of
any registered entity, in or in connection with any order to
make, or the making of, any contract of sale of any commodity
for future delivery (or option on such a contract), or any
swap, on a group or index of securities (or any interest
therein or based on the value thereof)--
``(1) to employ any device, scheme, or artifice to defraud;
``(2) to make any untrue statement of a material fact or to
omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under
which they were made, not misleading; or
``(3) to engage in any act, practice, or course of business
which operates or would operate as a fraud or deceit upon any
person.''.
(2) Section 4c(a)(1) of the Commodity Exchange Act (7
U.S.C. 6c(a)(1)) is amended by inserting ``or swap'' before
``if the transaction is used or may be used''.
(3) Section 6(c) of the Commodity Exchange Act (7 U.S.C. 9)
is amended in the first sentence by inserting ``or of any
swap,'' before ``or has willfully made''.
(4) Section 6(d) of the Commodity Exchange Act (7 U.S.C.
13b) is amended in the first sentence, in the matter
preceding the proviso, by inserting ``or of any swap,''
before ``or otherwise is violating''.
(5) Section 6c(a) of the Commodity Exchange Act (7 U.S.C.
13a-1(a)) is amended in the matter preceding the proviso by
inserting ``or any swap'' after ``commodity for future
delivery''.
(6) Section 9 of the Commodity Exchange Act (7 U.S.C. 13)
is amended--
(A) in subsection (a)--
(i) in paragraph (2), by inserting ``or of any swap,''
before ``or to corner''; and
(ii) in paragraph (4), by inserting ``swap data
repository,'' before ``or futures association'' and
(B) in subsection (e)(1)--
(i) by inserting ``swap data repository,'' before ``or
registered futures association''; and
(ii) by inserting ``, or swaps,'' before ``on the basis''.
(7) Section 9(a) of the Commodity Exchange Act (7 U.S.C.
13(a)) is amended by adding at the end the following:
``(6) Any person to abuse the end user clearing exemption
under section 2(h)(4), as determined by the Commission.''.
(8) Section 8(b) of the Federal Deposit Insurance Act (12
U.S.C. 1818(b)) is amended by adding at the end the
following:
``(11) Swaps.--
``(A) In general.--Subject to subparagraph (B), this
section shall apply to any swap dealer, major swap
participant, security-based swap dealer, major security-based
swap participant, derivatives clearing organization, swap
data repository, or swap execution facility, regardless of
whether the dealer, participant, organization, repository, or
facility is an insured depository institution, for which the
Board, the Corporation, or the Office of the Comptroller of
the Currency is the appropriate Federal banking agency or
prudential regulator for purposes of the amendments made by
the Wall Street Transparency and Accountability Act of 2010.
``(B) Limitation.--The authority described in subparagraph
(A) shall be limited by, and exercised in accordance with,
section 4b-1 of the Commodity Exchange Act.''.
(9) Section 2(c)(2)(B) of the Commodity Exchange Act (7
U.S.C. 2(c)(2)(B)) is amended--
(A) by striking ``(dd),'' each place it appears;
(B) in clause (iii), by inserting ``, and accounts or
pooled investment vehicles described in clause (vi),'' before
``shall be subject to''; and
(C) by adding at the end the following:
``(vi) This Act applies to, and the Commission shall have
jurisdiction over, an account or pooled investment vehicle
that is offered for the purpose of trading, or that trades,
any agreement, contract, or transaction in foreign currency
described in clause (i).''.
(10) Section 2(c)(2)(C) of the Commodity Exchange Act (7
U.S.C. 2(c)(2)(C)) is amended--
(A) by striking ``(dd),'' each place it appears;
(B) in clause (ii)(I), by inserting ``, and accounts or
pooled investment vehicles described in clause (vii),''
before ``shall be subject to''; and
(C) by adding at the end the following:
``(vii) This Act applies to, and the Commission shall have
jurisdiction over, an account or pooled investment vehicle
that is offered for the purpose of trading, or that trades,
any agreement, contract, or transaction in foreign currency
described in clause (i).''.
(11) Section 1a(19)(A)(iv)(II) of the Commodity Exchange
Act (7 U.S.C. 1a(19)(A)(iv)(II)) (as redesignated by section
721(a)(1)) is amended by inserting before the semicolon at
the end the following: ``provided, however, that for purposes
of section 2(c)(2)(B)(vi) and section 2(c)(2)(C)(vii), the
term `eligible contract participant' shall not include a
commodity pool in which any participant is not otherwise an
eligible contract participant''.

SEC. 742. RETAIL COMMODITY TRANSACTIONS.

(a) In General.--Section 2(c) of the Commodity Exchange Act
(7 U.S.C. 2(c)) is amended--
(1) in paragraph (1), by striking ``(to the extent provided
in section 5a(g)), 5b, 5d, or 12(e)(2)(B))'' and inserting
``, 5b, or 12(e)(2)(B))''; and
(2) in paragraph (2), by adding at the end the following:
``(D) Retail commodity transactions.--
``(i) Applicability.--Except as provided in clause (ii),
this subparagraph shall apply to any agreement, contract, or
transaction in any commodity that is--

``(I) entered into with, or offered to (even if not entered
into with), a person that is not an eligible contract
participant or eligible commercial entity; and
``(II) entered into, or offered (even if not entered into),
on a leveraged or margined basis, or financed by the offeror,
the counterparty, or a person acting in concert with the
offeror or counterparty on a similar basis.

``(ii) Exceptions.--This subparagraph shall not apply to--

``(I) an agreement, contract, or transaction described in
paragraph (1) or subparagraphs (A), (B), or (C), including
any agreement, contract, or transaction specifically excluded
from subparagraph (A), (B), or (C);
``(II) any security;
``(III) a contract of sale that--

``(aa) results in actual delivery within 28 days or such
other period as the Commission may determine by rule or
regulation based upon the typical commercial practice in cash
or spot markets for the commodity involved; or
``(bb) creates an enforceable obligation to deliver between
a seller and a buyer that have the ability to deliver and
accept delivery, respectively, in connection with the line of
business of the seller and buyer; or

``(IV) an agreement, contract, or transaction that is
listed on a national securities exchange registered under
section 6(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78f(a)); or
``(V) an identified banking product, as defined in section
402(b) of the Legal Certainty for Bank Products Act of 2000
(7 U.S.C.27(b)).

``(iii) Enforcement.--Sections 4(a), 4(b), and 4b apply to
any agreement, contract, or transaction described in clause
(i), as if the agreement, contract, or transaction was a
contract of sale of a commodity for future delivery.
``(iv) Eligible commercial entity.--For purposes of this
subparagraph, an agricultural producer, packer, or handler
shall be considered to be an eligible commercial entity for
any agreement, contract, or transaction for a commodity in
connection with the line of business of the agricultural
producer, packer, or handler.
``(v) Actual delivery.--For purposes of clause (ii)(III),
the term `actual delivery' does not include delivery to a
third party in a financed transaction in which the commodity
is held as collateral.''.
(b) Gramm-Leach-Bliley Act.--Section 206(a) of the Gramm-
Leach-Bliley Act (Public Law 106-102; 15 U.S.C. 78c note) is
amended, in the matter preceding paragraph (1), by striking
``For purposes of'' and inserting ``Except as provided in
subsection (e), for purposes of''.

[[Page S2889]]

(c) Conforming Amendments Relating to Retail Foreign
Exchange Transactions.--
(1) Section 2(c)(2)(B)(i)(II) of the Commodity Exchange Act
(7 U.S.C. 2(c)(2)(B)(i)(II)) is amended--
(A) in item (aa), by inserting ``United States'' before
``financial institution'';
(B) by striking items (dd) and (ff);
(C) by redesignating items (ee) and (gg) as items (dd) and
(ff), respectively; and
(D) in item (dd) (as so redesignated), by striking the
semicolon and inserting ``; or''.
(2) Section 2(c)(2) of the Commodity Exchange Act (7 U.S.C.
2(c)(2)) (as amended by subsection (a)(2)) is amended by
adding at the end the following:
``(E) Prohibition.--
``(i) Definition of federal regulatory agency.--In this
subparagraph, the term `Federal regulatory agency' means--

``(I) the Commission;
``(II) the Securities and Exchange Commission;
``(III) an appropriate Federal banking agency;
``(IV) the National Credit Union Association; and
``(V) the Farm Credit Administration.

``(ii) Prohibition.--A person described in subparagraph
(B)(i)(II) for which there is a Federal regulatory agency
shall not offer to, or enter into with, a person that is not
an eligible contract participant, any agreement, contract, or
transaction in foreign currency described in subparagraph
(B)(i)(I) except pursuant to a rule or regulation of a
Federal regulatory agency allowing the agreement, contract,
or transaction under such terms and conditions as the Federal
regulatory agency shall prescribe.
``(iii) Requirements of rules and regulations.--

``(I) In general.--The rules and regulations described in
clause (ii) shall prescribe appropriate requirements with
respect to--

``(aa) disclosure;
``(bb) recordkeeping;
``(cc) capital and margin;
``(dd) reporting;
``(ee) business conduct;
``(ff) documentation; and
``(gg) such other standards or requirements as the Federal
regulatory agency shall determine to be necessary.

``(II) Treatment.--The rules or regulations described in
clause (ii) shall treat all agreements, contracts, and
transactions in foreign currency described in subparagraph
(B)(i)(I), and all agreements, contracts, and transactions in
foreign currency that are functionally or economically
similar to agreements, contracts, or transactions described
in subparagraph (B)(i)(I), similarly.''.

SEC. 743. OTHER AUTHORITY.

Unless otherwise provided by the amendments made by this
subtitle, the amendments made by this subtitle do not divest
any appropriate Federal banking agency, the Commodity Futures
Trading Commission, the Securities and Exchange Commission,
or other Federal or State agency of any authority derived
from any other applicable law.

SEC. 744. RESTITUTION REMEDIES.

Section 6c(d) of the Commodity Exchange Act (7 U.S.C. 13a-
1(d)) is amended by adding at the end the following:
``(3) Equitable remedies.--In any action brought under this
section, the Commission may seek, and the court shall have
jurisdiction to impose, on a proper showing, on any person
found in the action to have committed any violation,
equitable remedies including--
``(A) restitution to persons who have sustained losses
proximately caused by such violation (in the amount of such
losses); and
``(B) disgorgement of gains received in connection with
such violation.''.

SEC. 745. ENHANCED COMPLIANCE BY REGISTERED ENTITIES.

(a) Core Principles for Contract Markets.--Section 5(d) of
the Commodity Exchange Act (7 U.S.C. 7(d)) (as amended by
section 735(b)) is amended by striking paragraph (1) and
inserting the following:
``(1) Designation.--
``(A) In general.--To be designated as, and to maintain the
designation of, a board of trade as a contract market, the
board of trade shall comply with--
``(i) the core principles described in this subsection; and
``(ii) any requirement that the Commission may impose by
rule or regulation pursuant to section 8a(5).
``(B) Discretion of board of trade.--Unless the Commission
determines otherwise by rule or regulation, the board of
trade shall have reasonable discretion in establishing the
manner by which the board of trade complies with each core
principle.''.
(b) Core Principles.--Section 5b(c)(2) of the Commodity
Exchange Act (7 U.S.C. 7a-1(c)(2)) (as amended by section
725(c)) is amended by striking subparagraph (A) and inserting
the following:
``(A) Registration.--
``(i) In general.--To be registered and to maintain
registration as a derivatives clearing organization, a
derivatives clearing organization shall comply with--

``(I) the core principles described in this paragraph; and
``(II) any requirement that the Commission may impose by
rule or regulation pursuant to section 8a(5).

``(ii) Discretion of commission.--Unless the Commission
determines otherwise by rule or regulation, a derivatives
clearing organization shall have reasonable discretion in
establishing the manner by which the derivatives clearing
organization complies with each core principle.''.
(c) Effect of Interpretation.--Section 5c(a) of the
Commodity Exchange Act (7 U.S.C. 7a-2(a)) is amended by
striking paragraph (2) and inserting the following:
``(2) Effect of interpretation.--An interpretation issued
under paragraph (1) may provide the exclusive means for
complying with each section described in paragraph (1).''.
(d) New Contracts, New Rules, and Rule Amendments.--
(1) In general.--A registered entity may elect to list for
trading or accept for clearing any new contract, or other
instrument, or may elect to approve and implement any new
rule or rule amendment, by providing to the Commission (and
the Secretary of the Treasury, in the case of a contract of
sale of a government security for future delivery (or option
on such a contract) or a rule or rule amendment specifically
related to such a contract) a written certification that the
new contract or instrument or clearing of the new contract or
instrument, new rule, or rule amendment complies with this
Act (including regulations under this Act).
(2) Rule review.--The new rule or rule amendment described
in paragraph (1) shall become effective, pursuant to the
certification of the registered entity, on the date that is
10 business days after the date on which the Commission
receives the certification (or such shorter period as
determined by the Commission by rule or regulation) unless
the Commission notifies the registered entity within such
time that it is staying the certification because there exist
novel or complex issues that require additional time to
analyze, an inadequate explanation by the submitting
registered entity, or a potential inconsistency with this Act
(including regulations under this Act).
(3) Stay of certification for rules.--
(A) A notification by the Commission pursuant to paragraph
(2) shall stay the certification of the new rule or rule
amendment for up to an additional 90 days from the date of
the notification.
(B) A rule or rule amendment subject to a stay pursuant to
subparagraph (A) shall become effective, pursuant to the
certification of the registered entity, at the expiration of
the period described in subparagraph (A) unless the
Commission--
(i) withdraws the stay prior to that time; or
(ii) notifies the registered entity during such period that
it objects to the proposed certification on the grounds that
it is inconsistent with this Act (including regulations under
this Act).
(4) Prior approval.--
(A) In general.--A registered entity may request that the
Commission grant prior approval to any new contract or other
instrument, new rule, or rule amendment.
(B) Prior approval required.--Notwithstanding any other
provision of this section, a designated contract market shall
submit to the Commission for prior approval each rule
amendment that materially changes the terms and conditions,
as determined by the Commission, in any contract of sale for
future delivery of a commodity specifically enumerated in
section 1a(10) (or any option thereon) traded through its
facilities if the rule amendment applies to contracts and
delivery months which have already been listed for trading
and have open interest.
(C) Deadline.--If prior approval is requested under
subparagraph (A), the Commission shall take final action on
the request not later than 90 days after submission of the
request, unless the person submitting the request agrees to
an extension of the time limitation established under this
subparagraph.
(5) Approval.--
(A) Rules.--The Commission shall approve a new rule, or
rule amendment, of a registered entity unless the Commission
finds that the new rule, or rule amendment, is inconsistent
with this subtitle (including regulations).
(B) Contracts and instruments.--The Commission shall
approve a new contract or other instrument unless the
Commission finds that the new contract or other instrument
would violate this subtitle (including regulations).
(C) Special rule for review and approval of event contracts
and swaps contracts.--
(i) Event contracts.--In connection with the listing of
agreements, contracts, transactions, or swaps in excluded
commodities that are based upon the occurrence, extent of an
occurrence, or contingency (other than a change in the price,
rate, value, or levels of a commodity described in section
1a(2)(i)), by a designated contract market or swap execution
facility, the Commission may determine that such agreements,
contracts, or transactions are contrary to the public
interest if the agreements, contracts, or transactions
involve--

(I) activity that is unlawful under any Federal or State
law;
(II) terrorism;
(III) assassination;
(IV) war;
(V) gaming; or
(VI) other similar activity determined by the Commission,
by rule or regulation, to be contrary to the public interest.

(ii) Prohibition.--No agreement, contract, or transaction
determined by the Commission to be contrary to the public
interest under clause (i) may be listed or made available for
clearing or trading on or through a registered entity.

[[Page S2890]]

(iii) Swaps contracts.--

(I) In general.--In connection with the listing of a swap
for clearing by a derivatives clearing organization, the
Commission shall determine, upon request or on its own
motion, the initial eligibility, or the continuing
qualification, of a derivatives clearing organization to
clear such a swap under those criteria, conditions, or rules
that the Commission, in its discretion, determines.
(II) Requirements.--Any such criteria, conditions, or rules
shall consider--

(aa) the financial integrity of the derivatives clearing
organization; and
(bb) any other factors which the Commission determines may
be appropriate.
(iv) Deadline.--The Commission shall take final action
under clauses (i) and (ii) in not later than 90 days from the
commencement of its review unless the party seeking to offer
the contract or swap agrees to an extension of this time
limitation.
(e) Violation of Core Principles.--Section 5c of the
Commodity Exchange Act (7 U.S.C. 7a-2) is amended by striking
subsection (d).

SEC. 746. INSIDER TRADING.

Section 4c(a) of the Commodity Exchange Act (7 U.S.C.
6c(a)) is amended by adding at the end the following:
``(3) Contract of sale.--It shall be unlawful for any
employee or agent of any department or agency of the Federal
Government who, by virtue of the employment or position of
the employee or agent, acquires information that may affect
or tend to affect the price of any commodity in interstate
commerce, or for future delivery, or any swap, and which
information has not been disseminated by the department or
agency of the Federal Government holding or creating the
information in a manner which makes it generally available to
the trading public, or disclosed in a criminal, civil, or
administrative hearing, or in a congressional,
administrative, or Government Accountability Office report,
hearing, audit, or investigation, to use the information in
his personal capacity and for personal gain to enter into, or
offer to enter into--
``(A) a contract of sale of a commodity for future delivery
(or option on such a contract);
``(B) an option (other than an option executed or traded on
a national securities exchange registered pursuant to section
6(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78f(a)); or
``(C) a swap.
``(4) Nonpublic information.--
``(A) Imparting of nonpublic information.--It shall be
unlawful for any employee or agent of any department or
agency of the Federal Government who, by virtue of the
employment or position of the employee or agent, acquires
information that may affect or tend to affect the price of
any commodity in interstate commerce, or for future delivery,
or any swap, and which information has not been disseminated
by the department or agency of the Federal Government holding
or creating the information in a manner which makes it
generally available to the trading public, or disclosed in a
criminal, civil, or administrative hearing, or in a
congressional, administrative, or Government Accountability
Office report, hearing, audit, or investigation, to impart
the information in his personal capacity and for personal
gain with intent to assist another person, directly or
indirectly, to use the information to enter into, or offer to
enter into--
``(i) a contract of sale of a commodity for future delivery
(or option on such a contract);
``(ii) an option (other than an option executed or traded
on a national securities exchange registered pursuant to
section 6(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78f(a)); or
``(iii) a swap.
``(B) Knowing use.--It shall be unlawful for any person who
receives information imparted by any employee or agent of any
department or agency of the Federal Government as described
in subparagraph (A) to knowingly use such information to
enter into, or offer to enter into--
``(i) a contract of sale of a commodity for future delivery
(or option on such a contract);
``(ii) an option (other than an option executed or traded
on a national securities exchange registered pursuant to
section 6(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78f(a)); or
``(iii) a swap.
``(C) Theft of nonpublic information.--It shall be unlawful
for any person to steal, convert, or misappropriate, by any
means whatsoever, information held or created by any
department or agency of the Federal Government that may
affect or tend to affect the price of any commodity in
interstate commerce, or for future delivery, or any swap,
where such person knows, or acts in reckless disregard of the
fact, that such information has not been disseminated by the
department or agency of the Federal Government holding or
creating the information in a manner which makes it generally
available to the trading public, or disclosed in a criminal,
civil, or administrative hearing, or in a congressional,
administrative, or Government Accountability Office report,
hearing, audit, or investigation, and to use such
information, or to impart such information with the intent to
assist another person, directly or indirectly, to use such
information to enter into, or offer to enter into--
``(i) a contract of sale of a commodity for future delivery
(or option on such a contract);
``(ii) an option (other than an option executed or traded
on a national securities exchange registered pursuant to
section 6(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78f(a)); or
``(iii) a swap.
Provided, however, that nothing in this subparagraph shall
preclude a person that has provided information concerning,
or generated by, the person, its operations or activities, to
any employee or agent of any department or agency of the
Federal Government, voluntarily or as required by law, from
using such information to enter into, or offer to enter into,
a contract of sale, option, or swap described in clauses (i),
(ii), or (iii).''.

SEC. 747. ANTIDISRUPTIVE PRACTICES AUTHORITY.

Section 4c(a) of the Commodity Exchange Act (7 U.S.C.
6c(a)) (as amended by section 746) is amended by adding at
the end the following:
``(5) Disruptive practices.--It shall be unlawful for any
person to engage in any trading, practice, or conduct on or
subject to the rules of a registered entity that--
``(A) violates bids or offers;
``(B) demonstrates intentional or reckless disregard for
the orderly execution of transactions during the closing
period; or
``(C) is, is of the character of, or is commonly known to
the trade as, `spoofing' (bidding or offering with the intent
to cancel the bid or offer before execution).
``(6) Rulemaking authority.--The Commission may make and
promulgate such rules and regulations as, in the judgment of
the Commission, are reasonably necessary to prohibit the
trading practices described in paragraph (5) and any other
trading practice that is disruptive of fair and equitable
trading.
``(7) Use of swaps to defraud.--It shall be unlawful for
any person to enter into a swap knowing, or acting in
reckless disregard of the fact, that its counterparty will
use the swap as part of a device, scheme, or artifice to
defraud any third party.''.

SEC. 748. COMMODITY WHISTLEBLOWER INCENTIVES AND PROTECTION.

The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended
by adding at the end the following:

``SEC. 23. COMMODITY WHISTLEBLOWER INCENTIVES AND PROTECTION.

``(a) Definitions.--In this section:
``(1) Covered judicial or administrative action.--The term
`covered judicial or administrative action' means any
judicial or administrative action brought by the Commission
under this Act that results in monetary sanctions exceeding
$1,000,000.
``(2) Fund.--The term `Fund' means the Commodity Futures
Trading Commission Customer Protection Fund established under
subsection (g).
``(3) Monetary sanctions.--The term `monetary sanctions',
when used with respect to any judicial or administrative
action means--
``(A) any monies, including penalties, disgorgement,
restitution, and interest ordered to be paid; and
``(B) any monies deposited into a disgorgement fund or
other fund pursuant to section 308(b) of the Sarbanes-Oxley
Act of 2002 (15 U.S.C. 7246(b)), as a result of such action
or any settlement of such action.
``(4) Original information.--The term `original
information' means information that--
``(A) is derived from the independent knowledge or analysis
of a whistleblower;
``(B) is not known to the Commission from any other source,
unless the whistleblower is the original source of the
information; and
``(C) is not exclusively derived from an allegation made in
a judicial or administrative hearing, in a governmental
report, hearing, audit, or investigation, or from the news
media, unless the whistleblower is a source of the
information.
``(5) Related action.--The term `related action', when used
with respect to any judicial or administrative action brought
by the Commission under this Act, means any judicial or
administrative action brought by an entity described in
subclauses (i) through (vi) of subsection (g)(2)(B) that is
based upon the original information provided by a
whistleblower pursuant to subsection (a) that led to the
successful enforcement of the Commission action.
``(6) Successful resolution.--The term `successful
resolution', when used with respect to any judicial or
administrative action brought by the Commission under this
Act, includes any settlement of such action.
``(7) Whistleblower.--The term `whistleblower' means any
individual, or 2 or more individuals acting jointly, who
provides information relating to a violation of this Act to
the Commission, in a manner established by rule or
regulation, by the Commission.
``(b) Awards.--
``(1) In general.--In any covered judicial or
administrative action, or related action, the Commission,
under regulations prescribed by the Commission and subject to
subsection (c), shall pay an award or awards to 1 or more
whistleblowers who voluntarily provided original information
to the Commission that led to the successful enforcement of
the covered judicial or administrative action, or related
action, in an aggregate amount equal to--
``(A) not less than 10 percent, in total, of what has been
collected of the monetary sanctions imposed in the action or
related actions; and

[[Page S2891]]

``(B) not more than 30 percent, in total, of what has been
collected of the monetary sanctions imposed in the action or
related actions.
``(2) Payment of awards.--Any amount paid under paragraph
(1) shall be paid from the Fund.
``(c) Determination of Amount of Award; Denial of Award.--
``(1) Determination of amount of award.--
``(A) Discretion.--The determination of the amount of an
award made under subsection (b) shall be in the discretion of
the Commission.
``(B) Criteria.--In determining the amount of an award made
under subsection (b), the Commission shall take into
account--
``(i) the significance of the information provided by the
whistleblower to the success of the covered judicial or
administrative action;
``(ii) the degree of assistance provided by the
whistleblower and any legal representative of the
whistleblower in a covered judicial or administrative action;
``(iii) the programmatic interest of the Commission in
deterring violations of the Act (including regulations under
the Act) by making awards to whistleblowers who provide
information that leads to the successful enforcement of such
laws; and
``(iv) such additional relevant factors as the Commission
may establish by rule or regulation.
``(2) Denial of award.--No award under subsection (b) shall
be made--
``(A) to any whistleblower who is, or was at the time the
whistleblower acquired the original information submitted to
the Commission, a member, officer, or employee of--
``(i) a appropriate regulatory agency;
``(ii) the Department of Justice;
``(iii) a registered entity;
``(iv) a registered futures association; or
``(v) a self-regulatory organization as defined in section
3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)); or
``(vi) a law enforcement organization;
``(B) to any whistleblower who is convicted of a criminal
violation related to the judicial or administrative action
for which the whistleblower otherwise could receive an award
under this section;
``(C) to any whistleblower who submits information to the
Commission that is based on the facts underlying the covered
action submitted previously by another whistleblower;
``(D) to any whistleblower who fails to submit information
to the Commission in such form as the Commission may, by rule
or regulation, require.
``(d) Representation.--
``(1) Permitted representation.--Any whistleblower who
makes a claim for an award under subsection (b) may be
represented by counsel.
``(2) Required representation.--
``(A) In general.--Any whistleblower who anonymously makes
a claim for an award under subsection (b) shall be
represented by counsel if the whistleblower submits the
information upon which the claim is based.
``(B) Disclosure of identity.--Prior to the payment of an
award, a whistleblower shall disclose the identity of the
whistleblower and provide such other information as the
Commission may require, directly or through counsel for the
whistleblower.
``(e) No Contract Necessary.--No contract with the
Commission is necessary for any whistleblower to receive an
award under subsection (b), unless otherwise required by the
Commission, by rule or regulation.
``(f) Appeals.--
``(1) In general.--Any determination made under this
section, including whether, to whom, or in what amount to
make awards, shall be in the discretion of the Commission.
``(2) Appeals.--Any determination described in paragraph
(1) may be appealed to the appropriate court of appeals of
the United States not more than 30 days after the
determination is issued by the Commission.
``(3) Review.--The court shall review the determination
made by the Commission in accordance with section 7064 of
title 5, United States Code.
``(g) Commodity Futures Trading Commission Customer
Protection Fund.--
``(1) Establishment.--There is established in the Treasury
of the United States a revolving fund to be known as the
`Commodity Futures Trading Commission Customer Protection
Fund'.
``(2) Use of fund.--The Fund shall be available to the
Commission, without further appropriation or fiscal year
limitation, for--
``(A) the payment of awards to whistleblowers as provided
in subsection (a); and
``(B) the funding of customer education initiatives
designed to help customers protect themselves against fraud
or other violations of this Act, or the rules and regulations
thereunder.
``(3) Deposits and credits.--There shall be deposited into
or credited to the Fund--
``(A) any monetary judgment collected by the Commission in
any judicial or administrative action brought by the
Commission under this Act, that is not otherwise distributed
to victims of a violation of this Act or the rules and
regulations thereunder underlying such action, unless the
balance of the Fund at the time the monetary judgment is
collected exceeds $100,000,000; and
``(B) all income from investments made under paragraph (4).
``(4) Investments.--
``(A) Amounts in fund may be invested.--The Commission may
request the Secretary of the Treasury to invest the portion
of the Fund that is not, in the Commission's judgment,
required to meet the current needs of the Fund.
``(B) Eligible investments.--Investments shall be made by
the Secretary of the Treasury 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 Fund as determined by the Commission.
``(C) Interest and proceeds credited.--The interest on, and
the proceeds from the sale or redemption of, any obligations
held in the Fund shall be credited to, and form a part of,
the Fund.
``(5) Reports to congress.--Not later than October 30 of
each year, the Commission shall transmit to the Committee on
Agriculture, Nutrition, and Forestry of the Senate, and the
Committee on Agriculture of the House of Representatives a
report on--
``(A) the Commission's whistleblower award program under
this section, including a description of the number of awards
granted and the types of cases in which awards were granted
during the preceding fiscal year;
``(B) customer education initiatives described in paragraph
(2)(B) that were funded by the Fund during the preceding
fiscal year;
``(C) the balance of the Fund at the beginning of the
preceding fiscal year;
``(D) the amounts deposited into or credited to the Fund
during the preceding fiscal year;
``(E) the amount of earnings on investments of amounts in
the Fund during the preceding fiscal year;
``(F) the amount paid from the Fund during the preceding
fiscal year to whistleblowers pursuant to subsection (b);
``(G) the amount paid from the Fund during the preceding
fiscal year for customer education initiatives described in
paragraph (2)(B);
``(H) the balance of the Fund at the end of the preceding
fiscal year; and
``(I) a complete set of audited financial statements,
including a balance sheet, income statement, and cash flow
analysis.
``(h) Protection of Whistleblowers.--
``(1) Prohibition against retaliation.--
``(A) In general.--No employer may discharge, demote,
suspend, threaten, harass, directly or indirectly, or in any
other manner discriminate against, a whistleblower in the
terms and conditions of employment because of any lawful act
done by the whistleblower--
``(i) in providing information to the Commission in
accordance with subsection (b); or
``(ii) in assisting in any investigation or judicial or
administrative action of the Commission based upon or related
to such information.
``(B) Enforcement.--
``(i) Cause of action.--An individual who alleges discharge
or other discrimination in violation of subparagraph (A) may
bring an action under this subsection in the appropriate
district court of the United States for the relief provided
in subparagraph (C), unless the individual who is alleging
discharge or other discrimination in violation of
subparagraph (A) is an employee of the federal government, in
which case the individual shall only bring an action under
section 1221 of title 5 United States Code.
``(ii) Subpoenas.--A subpoena requiring the attendance of a
witness at a trial or hearing conducted under this subsection
may be served at any place in the United States.
``(iii) Statute of limitations.--An action under this
subsection may not be brought more than 2 years after the
date on which the violation reported in subparagraph (A) is
committed.
``(C) Relief.--Relief for an individual prevailing in an
action brought under subparagraph (B) shall include--
``(i) reinstatement with the same seniority status that the
individual would have had, but for the discrimination;
``(ii) the amount of back pay otherwise owed to the
individual, with interest; and
``(iii) compensation for any special damages sustained as a
result of the discharge or discrimination, including
litigation costs, expert witness fees, and reasonable
attorney's fees.
``(2) Confidentiality.--
``(A) Information provided.--
``(i) In general.--Except as provided in subparagraph (B),
all information provided to the Commission by a whistleblower
shall be confidential and privileged as an evidentiary matter
(and shall not be subject to civil discovery or other legal
process) in any proceeding in any Federal or State court or
administrative agency, and shall be exempt from disclosure,
in the hands of a department or agency of the Federal
Government, under section 552 of title 5, United States Code
(commonly known as the `Freedom of Information Act') or
otherwise, unless and until required to be disclosed to a
defendant or respondent in connection with a public
proceeding instituted by the Commission or any entity
described in subparagraph (B).
``(ii) Construction.--For purposes of section 552 of title
5, United States Code, this paragraph shall be considered to
be a statute described in subsection (b)(3)(B) of that
section.
``(iii) Effect.--Nothing in this paragraph is intended to
limit the ability of the Attorney General to present such
evidence to a

[[Page S2892]]

grand jury or to share such evidence with potential witnesses
or defendants in the course of an ongoing criminal
investigation.
``(B) Availability to government agencies.--
``(i) In general.--Without the loss of its status as
confidential and privileged in the hands of the Commission,
all information referred to in subparagraph (A) may, in the
discretion of the Commission, when determined by the
Commission to be necessary or appropriate to accomplish the
purposes of this Act and protect customers and in accordance
with clause (ii), be made available to--

``(I) the Department of Justice;
``(II) an appropriate department or agency of the Federal
Government, acting within the scope of its jurisdiction;
``(III) a registered entity, registered futures
association, or self-regulatory organization as defined in
section 3(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a));
``(IV) a State attorney general in connection with any
criminal investigation;
``(V) an appropriate department or agency of any State,
acting within the scope of its jurisdiction; and
``(VI) a foreign futures authority.

``(ii) Maintenance of information.--Each of the entities,
agencies, or persons described in clause (i) shall maintain
information described in that clause as confidential and
privileged, in accordance with the requirements in
subparagraph (A).
``(3) Rights retained.--Nothing in this section shall be
deemed to diminish the rights, privileges, or remedies of any
whistleblower under any Federal or State law, or under any
collective bargaining agreement.
``(i) Rulemaking Authority.--The Commission shall have the
authority to issue such rules and regulations as may be
necessary or appropriate to implement the provisions of this
section consistent with the purposes of this section.
``(j) Implementing Rules.--The Commission shall issue final
rules or regulations implementing the provisions of this
section not later than 270 days after the date of enactment
of the Wall Street Transparency and Accountability Act of
2010.
``(k) Original Information.--Information submitted to the
Commission by a whistleblower in accordance with rules or
regulations implementing this section shall not lose its
status as original information solely because the
whistleblower submitted such information prior to the
effective date of such rules or regulations, provided such
information was submitted after the date of enactment of the
Wall Street Transparency and Accountability Act of 2010.
``(l) Awards.--A whistleblower may receive an award
pursuant to this section regardless of whether any violation
of a provision of this Act, or a rule or regulation
thereunder, underlying the judicial or administrative action
upon which the award is based occurred prior to the date of
enactment of the Wall Street Transparency and Accountability
Act of 2010.
``(m) Provision of False Information.--A whistleblower who
knowingly and willfully makes any false, fictitious, or
fraudulent statement or representation, or who makes or uses
any false writing or document knowing the same to contain any
false, fictitious, or fraudulent statement or entry, shall
not be entitled to an award under this section and shall be
subject to prosecution under section 1001 of title 18, United
States Code.''.

SEC. 749. CONFORMING AMENDMENTS.

(a) Section 2(c)(1) of the Commodity Exchange Act (7 U.S.C.
2(c)(1)) is amended, in the matter preceding subparagraph
(A), by striking ``5a (to the extent provided in section
5a(g)),''.
(b) Section 4d of the Commodity Exchange Act (7 U.S.C. 6d)
(as amended by section 724) is amended--
(1) in subsection (a)--
(A) in the matter preceding paragraph (1)--
(i) by striking ``engage as'' and inserting ``be a''; and
(ii) by striking ``or introducing broker'' and all that
follows through ``or derivatives transaction execution
facility'';
(B) in paragraph (1), by striking ``or introducing
broker''; and
(C) in paragraph (2), by striking ``if a futures commission
merchant,''; and
(2) by adding at the end the following:
``(g) It shall be unlawful for any person to be an
introducing broker unless such person shall have registered
under this Act with the Commission as an introducing broker
and such registration shall not have expired nor been
suspended nor revoked.''.
(c) Section 4m(3) of the Commodity Exchange Act (7 U.S.C.
6m(3)) is amended--
(1) by striking ``(3) Subsection (1) of this section'' and
inserting the following:
``(3) Exception.--
``(A) In general.--Paragraph (1)''; and
(2) by striking ``to any investment trust'' and all that
follows through the period at the end and inserting the
following: ``to any commodity pool that is engaged primarily
in trading commodity interests.
``(B) Engaged primarily.--For purposes of subparagraph (A),
a commodity trading advisor or a commodity pool shall be
considered to be `engaged primarily' in the business of being
a commodity trading advisor or commodity pool if it is or
holds itself out to the public as being engaged primarily, or
proposes to engage primarily, in the business of advising on
commodity interests or investing, reinvesting, owning,
holding, or trading in commodity interests, respectively.
``(C) Commodity interests.--For purposes of this paragraph,
commodity interests shall include contracts of sale of a
commodity for future delivery, options on such contracts,
security futures, swaps, leverage contracts, foreign
exchange, spot and forward contracts on physical commodities,
and any monies held in an account used for trading commodity
interests.''.
(d) Section 5c of the Commodity Exchange Act (7 U.S.C. 7a-
2) is amended--
(1) in subsection (a)(1)--
(A) by striking ``, 5a(d),''; and
(B) by striking ``and section (2)(h)(7) with respect to
significant price discovery contracts,''; and
(2) in subsection (f)(1), by striking ``section 4d(c) of
this Act'' and inserting ``section 4d(e)''.
(e) Section 5e of the Commodity Exchange Act (7 U.S.C. 7b)
is amended by striking ``or revocation of the right of an
electronic trading facility to rely on the exemption set
forth in section 2(h)(3) with respect to a significant price
discovery contract,''.
(f) Section 6(b) of the Commodity Exchange Act (7 U.S.C.
8(b)) is amended in the first sentence by striking ``, or to
revoke the right of an electronic trading facility to rely on
the exemption set forth in section 2(h)(3) with respect to a
significant price discovery contract,''.
(g) Section 12(e)(2)(B) of the Commodity Exchange Act (7
U.S.C. 16(e)(2)(B)) is amended--
(1) by striking ``section 2(c), 2(d), 2(f), or 2(g) of this
Act'' and inserting ``section 2(c), 2(f), or 2(i) of this
Act''; and
(2) by striking ``2(h) or''.
(h) Section 17(r)(1) of the Commodity Exchange Act (7
U.S.C. 21(r)(1)) is amended by striking ``section 4d(c) of
this Act'' and inserting ``section 4d(e)''.
(i) Section 22(b)(1)(A) of the Commodity Exchange Act (7
U.S.C. 25(b)(1)(A)) is amended by striking ``section 2(h)(7)
or''.
(j) Section 408(2)(C) of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (12 U.S.C. 4421(2)(C)) is
amended--
(1) by striking ``section 2(c), 2(d), 2(f), or (2)(g) of
such Act'' and inserting ``section 2(c), 2(f), or 2(i) of
that Act''; and
(2) by striking ``2(h) or''.

SEC. 750. STUDY ON OVERSIGHT OF CARBON MARKETS.

(a) Interagency Working Group.--There is established to
carry out this section an interagency working group (referred
to in this section as the ``interagency group'') composed of
the following members or designees:
(1) The Chairman of the Commodity Futures Trading
Commission (referred to in this section as the
``Commission''), who shall serve as Chairman of the
interagency group.
(2) The Secretary of Agriculture.
(3) The Secretary of the Treasury.
(4) The Chairman of the Securities and Exchange Commission.
(5) The Administrator of the Environmental Protection
Agency.
(6) The Chairman of the Federal Energy Regulatory
Commission.
(7) The Commissioner of the Federal Trade Commission.
(8) The Administrator of the Energy Information
Administration.
(b) Administrative Support.--The Commission shall provide
the interagency group such administrative support services as
are necessary to enable the interagency group to carry out
the functions of the interagency group under this section.
(c) Consultation.--In carrying out this section, the
interagency group shall consult with representatives of
exchanges, clearinghouses, self-regulatory bodies, major
carbon market participants, consumers, and the general
public, as the interagency group determines to be
appropriate.
(d) Study.--The interagency group shall conduct a study on
the oversight of existing and prospective carbon markets to
ensure an efficient, secure, and transparent carbon market,
including oversight of spot markets and derivative markets.
(e) Report.--Not later than 180 days after the date of
enactment of this Act, the interagency group shall submit to
Congress a report on the results of the study conducted under
subsection (b), including recommendations for the oversight
of existing and prospective carbon markets to ensure an
efficient, secure, and transparent carbon market, including
oversight of spot markets and derivative markets.

SEC. 751. ENERGY AND ENVIRONMENTAL MARKETS ADVISORY
COMMITTEE.

Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a))
(as amended by section 727) is amended by adding at the end
the following:
``(15) Energy and environmental markets advisory
committee.--
``(A) Establishment.--
``(i) In general.--An Energy and Environmental Markets
Advisory Committee is hereby established.
``(ii) Membership.--The Committee shall have 9 members.
``(iii) Activities.--The Committee's objectives and scope
of activities shall be--

``(I) to conduct public meetings;
``(II) to submit reports and recommendations to the
Commission (including dissenting or minority views, if any);
and
``(III) otherwise to serve as a vehicle for discussion and
communication on matters of concern to exchanges, firms, end
users, and regulators regarding energy and environmental
markets and their regulation by the Commission.

``(B) Requirements.--

[[Page S2893]]

``(i) In general.--The Committee shall hold public meetings
at such intervals as are necessary to carry out the functions
of the Committee, but not less frequently than 2 times per
year.
``(ii) Members.--Members shall be appointed to 3-year
terms, but may be removed for cause by vote of the
Commission.
``(C) Appointment.--The Commission shall appoint members
with a wide diversity of opinion and who represent a broad
spectrum of interests, including hedgers and consumers.
``(D) Reimbursement.--Members shall be entitled to per diem
and travel expense reimbursement by the Commission.
``(E) FACA.--The Committee shall not be subject to the
Federal Advisory Committee Act (5 U.S.C. App.).''.

SEC. 752. INTERNATIONAL HARMONIZATION.

In order to promote effective and consistent global
regulation of swaps and security-based swaps, the Securities
and Exchange Commission, the Commodity Futures Trading
Commission, the Financial Stability Oversight Council, and
the Treasury Department--
(1) shall, both individually and collectively, consult and
coordinate with foreign regulatory authorities on the
establishment of consistent international standards with
respect to the regulation of such swaps; and
(2) may, both individually and collectively, agree to such
information-sharing arrangements as may be deemed to be
necessary or appropriate in the public interest or for the
protection of investors and swap counterparties.

SEC. 753. EFFECTIVE DATE.

Unless otherwise provided in this title, this subtitle
shall take effect on the date that is 180 days after the date
of enactment of this Act.

Subtitle B--Regulation of Security-Based Swap Markets

SEC. 761. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF
1934.

(a) Definitions.--Section 3(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)) is amended--
(1) in subparagraphs (A) and (B) of paragraph (5), by
inserting ``(not including security-based swaps, other than
security-based swaps with or for persons that are not
eligible contract participants)'' after ``securities'' each
place that term appears;
(2) in paragraph (10), by inserting ``security-based
swap,'' after ``security future,'';
(3) in paragraph (13), by adding at the end the following:
``For security-based swaps, such terms include the execution,
termination (prior to its scheduled maturity date),
assignment, exchange, or similar transfer or conveyance of,
or extinguishing of rights or obligations under, a security-
based swap, as the context may require.'';
(4) in paragraph (14), by adding at the end the following:
``For security-based swaps, such terms include the execution,
termination (prior to its scheduled maturity date),
assignment, exchange, or similar transfer or conveyance of,
or extinguishing of rights or obligations under, a security-
based swap, as the context may require.'';
(5) in paragraph (39)--
(A) in subparagraph (B)(i)--
(i) in subclause (I), by striking ``or government
securities dealer'' and inserting ``government securities
dealer, security-based swap dealer, or major security-based
swap participant''; and
(ii) in subclause (II), by inserting ``security-based swap
dealer, major security-based swap participant,'' after
``government securities dealer,'';
(B) in subparagraph (C), by striking ``or government
securities dealer'' and inserting ``government securities
dealer, security-based swap dealer, or major security-based
swap participant''; and
(C) in subparagraph (D), by inserting ``security-based swap
dealer, major security-based swap participant,'' after
``government securities dealer,''; and
(6) by adding at the end the following:
``(65) Eligible contract participant.--The term `eligible
contract participant' has the same meaning as in section 1a
of the Commodity Exchange Act (7 U.S.C. 1a).
``(66) Major swap participant.--The term `major swap
participant' has the same meaning as in section 1a of the
Commodity Exchange Act (7 U.S.C. 1a).
``(67) Major security-based swap participant.--
``(A) In general.--The term `major security-based swap
participant' means any person--
``(i) who is not a security-based swap dealer; and
``(ii)(I) who maintains a substantial position in security-
based swaps for any of the major security-based swap
categories, as such categories are determined by the
Commission, excluding--

``(aa) positions held for hedging or mitigating commercial
risk; and
``(bb) positions maintained by any employee benefit plan
(or any contract held by such a plan), as that term is
defined in paragraphs (3) and (32) of section 3 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1002), for the primary purpose of hedging or mitigating any
risk directly associated with the operation of the plan;

``(II) whose outstanding security-based swaps create
substantial counterparty exposure that could have serious
adverse effects on the financial stability of the United
States banking system or financial markets; or
``(III) that is a financial entity that--

``(aa) is highly leveraged relative to the amount of
capital such entity holds; and
``(bb) maintains a substantial position in outstanding
security-based swaps in any major security-based swap
category, as such categories are determined by the
Commission.

``(B) Definition of substantial position.--For purposes of
subparagraph (A), the Commission shall define, by rule or
regulation, the term `substantial position' at the threshold
that the Commission determines to be prudent for the
effective monitoring, management, and oversight of entities
that are systemically important or can significantly impact
the financial system of the United States.
``(C) Scope of designation.--For purposes of subparagraph
(A), a person may be designated as a major security-based
swap participant for 1 or more categories of security-based
swaps without being classified as a major security-based swap
participant for all classes of security-based swaps.
``(D) Capital.--In setting capital requirements for a
person that is designated as a major security-based swap
participant for a single type or single class or category of
security-based swap or activities, the prudential regulator
and the Commission shall take into account the risks
associated with other types of security-based swaps or
classes of security-based swaps or categories of security-
based swaps engaged in and the other activities conducted by
that person that are not otherwise subject to regulation
applicable to that person by virtue of the status of the
person as a major security-based swap participant.
``(68) Security-based swap.--
``(A) In general.--Except as provided in subparagraph (B),
the term `security-based swap' means any agreement, contract,
or transaction that--
``(i) is a swap, as that term is defined under section 1a
of the Commodity Exchange Act; and
``(ii) is based on--

``(I) an index that is a narrow-based security index,
including any interest therein or on the value thereof;
``(II) a single security or loan, including any interest
therein or on the value thereof; or
``(III) the occurrence, nonoccurrence, or extent of the
occurrence of an event relating to a single issuer of a
security or the issuers of securities in a narrow-based
security index, provided that such event directly affects the
financial statements, financial condition, or financial
obligations of the issuer.

``(B) Rule of construction regarding master agreements.--
The term `security-based swap' shall be construed to include
a master agreement that provides for an agreement, contract,
or transaction that is a security-based swap pursuant to
subparagraph (A), together with all supplements to any such
master agreement, without regard to whether the master
agreement contains an agreement, contract, or transaction
that is not a security-based swap pursuant to subparagraph
(A), except that the master agreement shall be considered to
be a security-based swap only with respect to each agreement,
contract, or transaction under the master agreement that is a
security-based swap pursuant to subparagraph (A).
``(C) Exclusions.--The term `security-based swap' does not
include any agreement, contract, or transaction that meets
the definition of a security-based swap only because such
agreement, contract, or transaction references, is based
upon, or settles through the transfer, delivery, or receipt
of an exempted security under paragraph (12), as in effect on
the date of enactment of the Futures Trading Act of 1982
(other than any municipal security as defined in paragraph
(29) as in effect on the date of enactment of the Futures
Trading Act of 1982), unless such agreement, contract, or
transaction is of the character of, or is commonly known in
the trade as, a put, call, or other option.
``(D) Mixed swap.--The term `security-based swap' includes
any agreement, contract, or transaction that is as described
in subparagraph (A) and also is based on the value of 1 or
more interest or other rates, currencies, commodities,
instruments of indebtedness, indices, quantitative measures,
other financial or economic interest or property of any kind
(other than a single security or a narrow-based security
index), or the occurrence, non-occurrence, or the extent of
the occurrence of an event or contingency associated with a
potential financial, economic, or commercial consequence
(other than an event described in subparagraph (A)(ii)(III)).
``(69) Swap.--The term `swap' has the same meaning as in
section 1a of the Commodity Exchange Act (7 U.S.C. 1a).
``(70) Person associated with a security-based swap dealer
or major security-based swap participant.--
``(A) In general.--The term `person associated with a
security-based swap dealer or major security-based swap
participant' or `associated person of a security-based swap
dealer or major security-based swap participant' means--
``(i) any partner, officer, director, or branch manager of
such security-based swap dealer or major security-based swap
participant (or any person occupying a similar status or
performing similar functions);
``(ii) any person directly or indirectly controlling,
controlled by, or under common

[[Page S2894]]

control with such security-based swap dealer or major
security-based swap participant; or
``(iii) any employee of such security-based swap dealer or
major security-based swap participant.
``(B) Exclusion.--Other than for purposes of section
15F(l)(2), the term `person associated with a security-based
swap dealer or major security-based swap participant' or
`associated person of a security-based swap dealer or major
security-based swap participant' does not include any person
associated with a security-based swap dealer or major
security-based swap participant whose functions are solely
clerical or ministerial.
``(71) Security-based swap dealer.--
``(A) In general.--The term `security-based swap dealer'
means any person who--
``(i) holds themself out as a dealer in security-based
swaps;
``(ii) makes a market in security-based swaps;
``(iii) regularly engages in the purchase and sale of
security-based swaps in the ordinary course of a business; or
``(iv) engages in any activity causing it to be commonly
known in the trade as a dealer or market maker in security-
based swaps.
``(B) Designation by type or class.--A person may be
designated as a security-based swap dealer for a single type
or single class or category of security-based swap or
activities and considered not to be a security-based swap
dealer for other types, classes, or categories of security-
based swaps or activities.
``(C) Capital.--In setting capital requirements for a
person that is designated as a security-based swap dealer for
a single type or single class or category of security-based
swap or activities, the prudential regulator and the
Commission shall take into account the risks associated with
other types of security-based swaps or classes of security-
based swaps or categories of security-based swaps engaged in
and the other activities conducted by that person that are
not otherwise subject to regulation applicable to that person
by virtue of the status of the person as a security-based
swap dealer.
``(72) 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)).
``(73) Board.--The term `Board' means the Board of
Governors of the Federal Reserve System.
``(74) Prudential regulator.--The term `prudential
regulator' has the same meaning as in section 1a of the
Commodity Exchange Act (7 U.S.C. 1a).
``(75) Security-based swap data repository.--The term
`security-based swap data repository' means any person that
collects, calculates, prepares, or maintains information or
records with respect to transactions or positions in, or the
terms and conditions of, security-based swaps entered into by
third parties.
``(76) Swap dealer.--The term `swap dealer' has the same
meaning as in section 1a of the Commodity Exchange Act (7
U.S.C. 1a).
``(77) Swap execution facility.--The term `swap execution
facility' means a facility in which multiple participants
have the ability to execute or trade security-based swaps by
accepting bids and offers made by other participants that are
open to multiple participants in the facility or system, or
confirmation facility, that--
``(A) facilitates the execution of security-based swaps
between persons; and
``(B) is not a designated contract market.
``(78) Security-based swap agreement.--
``(A) In general.--For purposes of sections 9, 10, 16, 20,
and 21A of this Act, and section 17 of the Securities Act of
1933 (15 U.S.C. 77q), the term `security-based swap
agreement' means a swap agreement as defined in section 206A
of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note) of which a
material term is based on the price, yield, value, or
volatility of any security or any group or index of
securities, or any interest therein.
``(B) Exclusions.--The term `security-based swap agreement'
does not include any security-based swap.''.
(b) Authority To Further Define Terms.--The Securities and
Exchange Commission may, by rule, further define the terms
``security-based swap'', ``security-based swap dealer'',
``major security-based swap participant'', and ``eligible
contract participant'' with regard to security-based swaps
(as such terms are defined in the amendments made by
subsection (a)) for the purpose of including transactions and
entities that have been structured to evade this subtitle or
the amendments made by this subtitle.
(c) Other Incorporated Definitions.--Except as the context
otherwise requires, in this subtitle, the terms ``prudential
regulator'', ``swap'', ``swap dealer'', ``major swap
participant'', ``swap data repository'', ``associated person
of a swap dealer or major swap participant'', ``eligible
contract participant'', ``swap execution facility'',
``security-based swap'', ``security-based swap dealer'',
``major security-based swap participant'', ``security-based
swap data repository'', and ``associated person of a
security-based swap dealer or major security-based swap
participant'' have the same meanings as in section 1a of the
Commodity Exchange Act (7 U.S.C. 1a), as amended by this Act.

SEC. 762. REPEAL OF PROHIBITION ON REGULATION OF SECURITY-
BASED SWAP AGREEMENTS.

(a) Repeal.--Sections 206B and 206C of the Gramm-Leach-
Bliley Act (Public Law 106-102; 15 U.S.C. 78c note) are
repealed.
(b) Conforming Amendments to the Securities Act of 1933.--
(1) Section 2A of the Securities Act of 1933 (15 U.S.C.
77b-1) is amended--
(A) by striking subsection (a) and reserving that
subsection; and
(B) by striking ``(as defined in section 206B of the Gramm-
Leach-Bliley Act)'' each place that such term appears and
inserting ``(as defined in section 3(a)(78) of the Securities
Exchange Act of 1934)''.
(2) Section 17 of the Securities Act of 1933 (15 U.S.C.
77q) is amended--
(A) in subsection (a)--
(i) by inserting ``(including security-based swaps)'' after
``securities''; and
(ii) by striking ``(as defined in section 206B of the
Gramm-Leach-Bliley Act)'' and inserting ``(as defined in
section 3(a)(78) of the Securities Exchange Act)''; and
(B) in subsection (d), by striking ``206B of the Gramm-
Leach-Bliley Act'' and inserting ``3(a)(78) of the Securities
Exchange Act of 1934''.
(c) Conforming Amendments to the Securities Exchange Act of
1934.--The Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.) is amended--
(1) in section 3A (15 U.S.C. 78c-1)--
(A) by striking subsection (a) and reserving that
subsection; and
(B) by striking ``(as defined in section 206B of the Gramm-
Leach-Bliley Act)'' each place that the term appears;
(2) in section 9 (15 U.S.C. 78i)--
(A) in subsection (a), by striking paragraphs (2) through
(5) and inserting the following:
``(2) To effect, alone or with 1 or more other persons, a
series of transactions in any security registered on a
national securities exchange, any security not so registered,
or in connection with any security-based swap or security-
based swap agreement with respect to such security creating
actual or apparent active trading in such security, or
raising or depressing the price of such security, for the
purpose of inducing the purchase or sale of such security by
others.
``(3) If a dealer, broker, security-based swap dealer,
major security-based swap participant, or other person
selling or offering for sale or purchasing or offering to
purchase the security, a security-based swap, or a security-
based swap agreement with respect to such security, to induce
the purchase or sale of any security registered on a national
securities exchange, any security not so registered, any
security-based swap, or any security-based swap agreement
with respect to such security by the circulation or
dissemination in the ordinary course of business of
information to the effect that the price of any such security
will or is likely to rise or fall because of market
operations of any 1 or more persons conducted for the purpose
of raising or depressing the price of such security.
``(4) If a dealer, broker, security-based swap dealer,
major security-based swap participant, or other person
selling or offering for sale or purchasing or offering to
purchase the security, a security-based swap, or security-
based swap agreement with respect to such security, to make,
regarding any security registered on a national securities
exchange, any security not so registered, any security-based
swap, or any security-based swap agreement with respect to
such security, for the purpose of inducing the purchase or
sale of such security, such security-based swap, or such
security-based swap agreement any statement which was at the
time and in the light of the circumstances under which it was
made, false or misleading with respect to any material fact,
and which that person knew or had reasonable ground to
believe was so false or misleading.
``(5) For a consideration, received directly or indirectly
from a broker, dealer, security-based swap dealer, major
security-based swap participant, or other person selling or
offering for sale or purchasing or offering to purchase the
security, a security-based swap, or security-based swap
agreement with respect to such security, to induce the
purchase of any security registered on a national securities
exchange, any security not so registered, any security-based
swap, or any security-based swap agreement with respect to
such security by the circulation or dissemination of
information to the effect that the price of any such security
will or is likely to rise or fall because of the market
operations of any 1 or more persons conducted for the purpose
of raising or depressing the price of such security.''; and
(B) in subsection (i), by striking ``(as defined in section
206B of the Gramm-Leach-Bliley Act)'';
(3) in section 10 (15 U.S.C. 78j)--
(A) in subsection (b), by striking ``(as defined in section
206B of the Gramm-Leach-Bliley Act),'' each place that term
appears; and
(B) in the matter following subsection (b), by striking
``(as defined in section 206B of the Gramm-Leach-Bliley
Act)'';
(4) in section 15 (15 U.S.C. 78o)--
(A) in subsection (c)(1)(A), by striking ``(as defined in
section 206B of the Gramm-Leach-Bliley Act),'';
(B) in subparagraphs (B) and (C) of subsection (c)(1), by
striking ``(as defined in section 206B of the Gramm-Leach-
Bliley Act)'' each place that term appears;
(C) by redesignating subsection (i), as added by section
303(f) of the Commodity Futures Modernization Act of 2000
(Public Law 106-554; 114 Stat. 2763A-455)), as subsection
(j); and

[[Page S2895]]

(D) in subsection (j), as redesignated by subparagraph (C),
by striking ``(as defined in section 206B of the Gramm-Leach-
Bliley Act)'';
(5) in section 16 (15 U.S.C. 78p)--
(A) in subsection (a)(2)(C), by striking ``(as defined in
section 206(b) of the Gramm-Leach-Bliley Act (15 U.S.C. 78c
note))'';
(B) in subsection (a)(3)(B), by inserting ``or security-
based swaps'' after ``security-based swap agreement'';
(C) in the first sentence of subsection (b), by striking
``(as defined in section 206B of the Gramm-Leach-Bliley
Act)'';
(D) in the third sentence of subsection (b), by striking
``(as defined in section 206B of the Gramm-Leach Bliley
Act)'' and inserting ``or a security-based swap''; and
(E) in subsection (g), by striking ``(as defined in section
206B of the Gramm-Leach-Bliley Act)'';
(6) in section 20 (15 U.S.C. 78t),
(A) in subsection (d), by striking ``(as defined in section
206B of the Gramm-Leach-Bliley Act)''; and
(B) in subsection (f), by striking ``(as defined in section
206B of the Gramm-Leach-Bliley Act)'';
(7) in section 21A (15 U.S.C. 78u-1)--
(A) in subsection (a)(1), by striking ``(as defined in
section 206B of the Gramm-Leach-Bliley Act)''; and
(B) in subsection (g), by striking ``(as defined in section
206B of the Gramm-Leach-Bliley Act)''.

SEC. 763. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.

(a) Clearing for Security-Based Swaps.--The Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by
inserting after section 3B (as added by section 717 of this
Act):

``SEC. 3C. CLEARING FOR SECURITY-BASED SWAPS.

``(a) Clearing Requirement.--
``(1) Submission.--
``(A) In general.--Except as provided in paragraphs (9) and
(10), any person who is a party to a security-based swap
shall submit such security-based swap for clearing to a
clearing agency registered under section 17A of this title.
``(B) Open access.--The rules of a registered clearing
agency shall--
``(i) prescribe that all security-based swaps with the same
terms and conditions are economically equivalent and may be
offset with each other within the clearing agency; and
``(ii) provide for nondiscriminatory clearing of a
security-based swap executed bilaterally or on or through the
rules of an unaffiliated national securities exchange or swap
execution facility, subject to the requirements of section
5(b).
``(2) Commission approval.--
``(A) In general.--A clearing agency shall submit to the
Commission for prior approval any group, category, type, or
class of security-based swaps that the clearing agency seeks
to accept for clearing, which submission the Commission shall
make available to the public.
``(B) Deadline.--The Commission shall take final action on
a request submitted pursuant to subparagraph (A) not later
than 90 days after submission of the request, unless the
clearing agency submitting the request agrees to an extension
of the time limitation established under this subparagraph.
``(C) Approval.--The Commission shall approve,
unconditionally or subject to such terms and conditions as
the Commission determines to be appropriate, any request
submitted pursuant to subparagraph (A) if the Commission
finds that the request is consistent with the requirements of
section 17A. The Commission shall not approve any such
request if the Commission does not make such finding.
``(D) Rules.--The Commission shall adopt rules for a
clearing agency's submission for approval, pursuant to this
paragraph, of any group, category, type, or class of
security-based swaps that the clearing agency seeks to accept
for clearing.
``(3) Stay of clearing requirement.--At any time after
issuance of an approval pursuant to paragraph (2):
``(A) Review process.--The Commission, on application of a
counterparty to a security-based swap or on its own
initiative, may stay the clearing requirement of paragraph
(1) until the Commission completes a review of the terms of
the security-based swap, or the group, category, type, or
class of security-based swaps, and the clearing arrangement.
``(B) Deadline.--The Commission shall complete a review
undertaken pursuant to subparagraph (A) not later than 90
days after issuance of the stay, unless the clearing agency
that clears the security-based swap, or the group, category,
type, or class of security-based swaps, agrees to an
extension of the time limitation established under this
subparagraph.
``(C) Determination.--Upon completion of the review
undertaken pursuant to subparagraph (A)--
``(i) the Commission may determine, unconditionally or
subject to such terms and conditions as the Commission
determines to be appropriate, that the security-based swap,
or the group, category, type, or class of security-based
swaps, must be cleared pursuant to this subsection if the
Commission finds that such clearing--

``(I) is consistent with the requirements of section 17A;
and
``(II) is otherwise in the public interest, for the
protection of investors, and consistent with the purposes of
this title;

``(ii) the Commission may determine that the clearing
requirement of paragraph (1) shall not apply to the security-
based swap, or the group, category, type, or class of
security-based swaps; or
``(iii) if a determination is made that the clearing
requirement of paragraph (1) shall no longer apply, then the
Commission may still permit such security-based swap, or the
group, category, type, or class of security-based swaps to be
cleared.
``(D) Rules.--The Commission shall adopt rules for
reviewing, pursuant to this paragraph, a clearing agency's
clearing of a security-based swap, or a group, category,
type, or class of security-based swaps that the Commission
has accepted for clearing.
``(4) Security-based swaps required to be accepted for
clearing.--
``(A) Rulemaking.--The Commission shall adopt rules to
further identify any group, category, type, or class of
security-based swaps not submitted for approval under
paragraph (2) that the Commission deems should be accepted
for clearing. In adopting such rules, the Commission shall
take into account the following factors:
``(i) The extent to which any of the terms of the group,
category, type, or class of security-based swaps, including
price, are disseminated to third parties or are referenced in
other agreements, contracts, or transactions.
``(ii) The volume of transactions in the group, category,
type, or class of security-based swaps.
``(iii) The extent to which the terms of the group,
category, type, or class of security-based swaps are similar
to the terms of other agreements, contracts, or transactions
that are cleared.
``(iv) Whether any differences in the terms of the group,
category, type, or class of security-based swaps, compared to
other agreements, contracts, or transactions that are
cleared, are of economic significance.
``(v) Whether a clearing agency is prepared to clear the
group, category, type, or class of security-based swaps and
such clearing agency has in place effective risk management
systems.
``(vi) Any other factor the Commission determines to be
appropriate.
``(B) Other designations.--At any time after the adoption
of the rules required under subparagraph (A), the Commission
may separately designate a particular security-based swap or
class of security-based swaps as subject to the clearing
requirement of paragraph (1), taking into account the factors
established in clauses (i) through (vi) of subparagraph (A)
and the rules adopted in such subparagraph.
``(C) In general.--In accordance with subparagraph (A), the
Commission shall, consistent with the public interest, adopt
rules under the expedited process described in subparagraph
(D) to establish criteria for determining that a swap, or any
group, category, type, or class of swap is required to be
cleared.
``(D) Expedited rulemaking authority.--
``(i) Procedure.--The promulgation of regulations under
subparagraph (A) may be made without regard to--

``(I) the notice and comment provisions of section 553 of
title 5, United States Code; and
``(II) chapter 35 of title 44, United States Code (commonly
known as the `Paperwork Reduction Act').

``(ii) Agency rulemaking.--In carrying out subparagraph
(A), the Commission shall use the authority provided under
section 808 of title 5, United States Code.
``(5) Prevention of evasion.--
``(A) In general.--The Commission shall have authority to
prescribe rules under this section, or issue interpretations
of such rules, as necessary to prevent evasions of this
section.
``(B) Duty of commission to investigate and take certain
actions.--To the extent the Commission finds that a
particular security-based swap or any group, category, type,
or class of security-based swaps that would otherwise be
subject to mandatory clearing but no clearing agency has
listed the security-based swap or the group, category, type,
or class of security-based swaps for clearing, the Commission
shall--
``(i) investigate the relevant facts and circumstances;
``(ii) within 30 days issue a public report containing the
results of the investigation; and
``(iii) take such actions as the Commission determines to
be necessary and in the public interest, which may include
requiring the retaining of adequate margin or capital by
parties to the security-based swap or the group, category,
type, or class of security-based swaps.
``(C) Effect on authority.--Nothing in this paragraph--
``(i) authorize the Commission to require a clearing agency
to list for clearing a security-based swap or any group,
category, type, or class of security-based swaps if the
clearing of the security-based swap or the group, category,
type, or class of security-based swaps would adversely affect
the business operations of the clearing agency, threaten the
financial integrity of the clearing agency, or pose a
systemic risk to the clearing agency; and
``(ii) affect the authority of the Commission to enforce
the open access provisions of paragraph (1) with respect to a
security-based swap or the group, category, type, or class of
security-based swaps that is listed for clearing by a
clearing agency.

[[Page S2896]]

``(6) Required reporting.--
``(A) Both counterparties.--Both counterparties to a
security-based swap that is not cleared by any clearing
agency shall report such a security-based swap either to a
registered security-based swap repository described in
section 13(n) or, if there is no repository that would accept
the security-based swap, to the Commission pursuant to
section 13A.
``(B) Timing.--Counterparties to a security-based swap
shall submit the reports required under subparagraph (A) not
later than such time period as the Commission may by rule or
regulation prescribe.
``(7) Transition rules.--
``(A) Reporting transition rules.--Rules adopted by the
Commission under this section shall provide for the reporting
of data, as follows:
``(i) Security-based swaps entered into before the date of
the enactment of this section shall be reported to a
registered security-based swap repository or the Commission
not later than 180 days after the effective date of this
section.
``(ii) Security-based swaps entered into on or after such
date of enactment shall be reported to a registered security-
based swap repository or the Commission not later than the
later of--

``(I) 90 days after such effective date; or
``(II) such other time after entering into the security-
based swap as the Commission may prescribe by rule or
regulation.

``(B) Clearing transition rules.--
``(i) Security-based swaps entered into before the date of
the enactment of this section are exempt from the clearing
requirements of this subsection if reported pursuant to
subparagraph (A)(i).
``(ii) Security-based swaps entered into before application
of the clearing requirement pursuant to this section are
exempt from the clearing requirements of this section if
reported pursuant to subparagraph (A)(ii).
``(8) Trade execution.--
``(A) In general.--With respect to transactions involving
security-based swaps subject to the clearing requirement of
paragraph (1), counterparties shall--
``(i) execute the transaction on an exchange; or
``(ii) execute the transaction on a swap execution facility
registered under section 3D or a swap execution facility that
is exempt from registration under section 3D(e).
``(B) Exception.--The requirements of clauses (i) and (ii)
of subparagraph (A) shall not apply--
``(i) if no national securities exchange or security-based
swap execution facility makes the security-based swap
available to trade; or
``(ii) to swap transactions where a commercial end user
opts to use the clearing exemption under paragraph (10).
``(9) Required exemption.--Subject to paragraph (4), the
Commission shall exempt a security-based swap from the
requirements of paragraphs (1) and (8) and any rules issued
under this subsection, if no clearing agency registered under
this Act will accept the security-based swap from clearing.
``(10) End user clearing exemption.--
``(A) Definition of commercial end user.--
``(i) In general.--In this paragraph, the term `commercial
end user' means any person other than a financial entity
described in clause (ii) who, as its primary business
activity, owns, uses, produces, processes, manufactures,
distributes, merchandises, or markets services or commodities
(which shall include coal, natural gas, electricity, ethanol,
crude oil, distillates, and other hydrocarbons) either
individually or in a fiduciary capacity.
``(ii) Financial entity.--The term `financial entity'
means--

``(I) a swap dealer, major swap participant, security-based
swap dealer, or major security-based swap participant;
``(II) a person predominantly engaged in activities that
are in the business of banking or financial in nature, as
defined in Section 4(k) of the Bank Holding Company Act of
1956;
``(III) a person predominantly engaged in activities that
are financial in nature;
``(IV) a private fund as defined in section 202(a) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)) or a
commodity pool as defined in section 1a of the Commodity
Exchange Act (7 U.S.C. 1a); or
``(V) a person that is registered or required to be
registered with the Commission, but does not include a public
company which registers its securities with the Commission.

``(B) End user clearing exemption.--
``(i) In general.--Subject to clause (ii), in the event
that a security-based swap is subject to the mandatory
clearing requirement under paragraph (1), and 1 of the
counterparties to the security-based swap is a commercial end
user that counterparty--

``(I)(aa) may elect not to clear the security-based swap,
as required under paragraph (1); or
``(bb) may elect to require clearing of the security-based
swap; and
``(II) if the end user makes an election under subclause
(I)(bb), shall have the sole right to select the clearing
agency at which the security-based swap will be cleared.

``(ii) Limitation.--A commercial end user may only make an
election under clause (i) if the end user is using the
security-based swap to hedge its own commercial risk.
``(C) Treatment of affiliates.--
``(i) In general.--An affiliate of a commercial end user
(including affiliate entities predominantly engaged in
providing financing for the purchase of the merchandise or
manufactured goods of the commercial end user) may make an
election under subparagraph (B)(i) only if the affiliate,
acting on behalf of the commercial end user and as an agent,
uses the security-based swap to hedge or mitigate the
commercial risk of the commercial end user parent or other
affiliates of the commercial end user that is not a financial
entity..
``(ii) Prohibition relating to certain affiliates.--An
affiliate of a commercial end user shall not use the
exemption under subparagraph (B) if the affiliate is--

``(I) a security-based swap dealer;
``(II) a security-based security-based swap dealer;
``(III) a major security-based swap participant;
``(IV) a major security-based security-based swap
participant;
``(V) 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 paragraph (1) or (7) of subsection
(c) of that section 3 (15 U.S.C. 80a-3(c));
``(VI) a commodity pool;
``(VII) a bank holding company with over $50,000,000,000 in
consolidated assets; or
``(VIII) an affiliate of any entity described in subclauses
(I) through (VII).

``(iii) Abuse of exemption.--The Commission may prescribe
such rules, or issue interpretations of the rules, as the
Commission determines to be necessary to prevent abuse of the
exemption described in subparagraph (B).
``(D) Option to clear.--
``(i) Security-based swaps required to be cleared entered
into with a financial entity.--With respect to any
securities-based swap that is required to be cleared by a
clearing agency and entered into by a securities-based swap
dealer or a major securities-based swap participant with a
financial entity, the financial entity shall have the sole
right to select the clearing agency at which the securities-
based swap will be cleared.
``(ii) Security-based swaps not required to be cleared
entered into with a financial entity or commercial end
user.--With respect to any securities-based swap that is not
required to be cleared by a clearing agency and entered into
by a securities-based swap dealer or a major securities-based
swap participant with a financial entity or commercial end
user, the financial entity or commercial end user--

``(I) may elect to require clearing of the securities-based
swap; and
``(II) shall have the sole right to select the clearing
agency at which the securities-based swap will be cleared.

``(b) Audit Committee Approval.--Exemptions from the
requirements of this section to clear or trade a security-
based swap through a national securities exchange or
security-based swap execution facility shall be available to
a counterparty that is an issuer of securities that are
registered under section 12 or that is required to file
reports pursuant to section 15(d), only if the issuer's audit
committee has reviewed and approved the issuer's decision to
enter into security-based swaps that are subject to such
exemptions.
``(c) Public Availability of Security-Based Swap
Transaction Data.--
``(1) In general.--
``(A) Definition of real-time public reporting.--In this
paragraph, the term `real-time public reporting' means to
report data relating to a security-based swap transaction as
soon as technologically practicable after the time at which
the security-based swap transaction has been executed.
``(B) Purpose.--The purpose of this section is to authorize
the Commission to make security-based swap transaction and
pricing data available to the public in such form and at such
times as the Commission determines appropriate to enhance
price discovery.
``(C) General rule.--The Commission is authorized to
provide by rule for the public availability of security-based
swap transaction and pricing data as follows:
``(i) With respect to those security-based swaps that are
subject to the mandatory clearing requirement described in
subsection (a)(1) (including those security-based swaps that
are exempted from those requirements), the Commission shall
require real-time public reporting for such transactions.
``(ii) With respect to those security-based swaps that are
not subject to the mandatory clearing requirement described
in subsection (a)(1), but are cleared at a registered
clearing agency, the Commission shall require real-time
public reporting for such transactions.
``(iii) With respect to security-based swaps that are not
cleared at a registered clearing agency and which are
reported to a security-based swap data repository or the
Commission under subsection (a), the Commission shall make
available to the public, in a manner that does not disclose
the business transactions and market positions of any person,
aggregate data on such security-based swap trading volumes
and positions.
``(iv) With respect to security-based swaps that are exempt
from the requirements of subsection (a)(1), but are subject
to the requirements of subsection (a)(8), the Commission
shall require real-time public reporting for such
transactions.
``(D) Registered entities and public reporting.--The
Commission may require registered entities to publicly
disseminate the security-based swap transaction and pricing
data required to be reported under this paragraph.

[[Page S2897]]

``(E) Rulemaking required.--With respect to the rule
providing for the public availability of transaction and
pricing data for security-based swaps described in clauses
(i) and (ii) of subparagraph (C), the rule promulgated by the
Commission shall contain provisions--
``(i) to ensure such information does not identify the
participants;
``(ii) to specify the criteria for determining what
constitutes a large notional security-based swap transaction
(block trade) for particular markets and contracts;
``(iii) to specify the appropriate time delay for reporting
large notional security-based swap transactions (block
trades) to the public; and
``(iv) that take into account whether the public disclosure
will materially reduce market liquidity.
``(F) Timeliness of reporting.--Parties to a security-based
swap (including agents of the parties to a security-based
swap) shall be responsible for reporting security-based swap
transaction information to the appropriate registered entity
in a timely manner as may be prescribed by the Commission.
``(2) Semiannual and annual public reporting of aggregate
security-based swap data.--
``(A) In general.--In accordance with subparagraph (B), the
Commission shall issue a written report on a semiannual and
annual basis to make available to the public information
relating to--
``(i) the trading and clearing in the major security-based
swap categories; and
``(ii) the market participants and developments in new
products.
``(B) Use; consultation.--In preparing a report under
subparagraph (A), the Commission shall--
``(i) use information from security-based swap data
repositories and clearing agencies; and
``(ii) consult with the Office of the Comptroller of the
Currency, the Bank for International Settlements, and such
other regulatory bodies as may be necessary.
``(C) Transition rule for preenactment security-based
swaps.--
``(i) Security-based swaps entered into before the date of
enactment of the wall street transparency and accountability
act of 2010.--Each security-based swap entered into before
the date of enactment of the Wall Street Transparency and
Accountability Act of 2010, the terms of which have not
expired as of the date of enactment of that Act, shall be
reported to a registered security-based swap data repository
or the Commission by a date that is not later than--

``(I) 30 days after the date of issuance of the interim
final rule; or
``(II) such other period as the Commission determines to be
appropriate.

``(ii) Commission rulemaking.--The Commission shall
promulgate an interim final rule within 90 days of the date
of enactment of this section providing for the reporting of
each security-based swap entered into before the date of
enactment as referenced in clause (i).
``(D) Effective date.--The reporting provisions described
in this paragraph shall be effective upon the date of
enactment of this section.
``(d) Designation of Chief Compliance Officer.--
``(1) In general.--Each registered clearing agency shall
designate an individual to serve as a chief compliance
officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior officer
of the clearing agency;
``(B) in consultation with its board, a body performing a
function similar thereto, or the senior officer of the
registered clearing agency, resolve any conflicts of interest
that may arise;
``(C) be responsible for administering each policy and
procedure that is required to be established pursuant to this
section;
``(D) ensure compliance with this title (including
regulations issued under this title) relating to agreements,
contracts, or transactions, including each rule prescribed by
the Commission under this section;
``(E) establish procedures for the remediation of
noncompliance issues identified by the compliance officer
through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(F) establish and follow appropriate procedures for the
handling, management response, remediation, retesting, and
closing of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules prescribed by
the Commission, the chief compliance officer shall annually
prepare and sign a report that contains a description of--
``(i) the compliance of the registered clearing agency or
security-based swap execution facility of the compliance
officer with respect to this title (including regulations
under this title); and
``(ii) each policy and procedure of the registered clearing
agency of the compliance officer (including the code of
ethics and conflict of interest policies of the registered
clearing agency).
``(B) Requirements.--A compliance report under subparagraph
(A) shall--
``(i) accompany each appropriate financial report of the
registered clearing agency that is required to be furnished
to the Commission pursuant to this section; and
``(ii) include a certification that, under penalty of law,
the compliance report is accurate and complete.''.
(b) Clearing Agency Requirements.--Section 17A of the
Securities Exchange Act of 1934 (15 U.S.C. 78q-1) is amended
by adding at the end the following:
``(g) Registration Requirement.--It shall be unlawful for a
clearing agency, unless registered with the Commission,
directly or indirectly to make use of the mails or any means
or instrumentality of interstate commerce to perform the
functions of a clearing agency with respect to a security-
based swap.
``(h) Voluntary Registration.--A person that clears
agreements, contracts, or transactions that are not required
to be cleared under this title may register with the
Commission as a clearing agency.
``(i) Standards for Clearing Agencies Clearing Security-
based Swap Transactions.--To be registered and to maintain
registration as a clearing agency that clears security-based
swap transactions, a clearing agency shall comply with such
standards as the Commission may establish by rule. In
establishing any such standards, and in the exercise of its
oversight of such a clearing agency pursuant to this title,
the Commission may conform such standards or oversight to
reflect evolving United States and international standards.
Except where the Commission determines otherwise by rule or
regulation, a clearing agency shall have reasonable
discretion in establishing the manner in which it complies
with any such standards.
``(j) Rules.--The Commission shall adopt rules governing
persons that are registered as clearing agencies for
security-based swaps under this title.
``(k) Exemptions.--
``(1) In general.--The Commission may exempt, conditionally
or unconditionally, a clearing agency from registration under
this section for the clearing of security-based swaps if the
Commission determines that the clearing agency is subject to
comparable, comprehensive supervision and regulation by the
Commodity Futures Trading Commission or the appropriate
government authorities in the home country of the agency.
Such conditions may include, but are not limited to,
requiring that the clearing agency be available for
inspection by the Commission and make available all
information requested by the Commission.
``(2) Derivatives clearing organizations.--A person that is
required to be registered as a derivatives clearing
organization under the Commodity Exchange Act, whose
principal business is clearing commodity futures and options
on commodity futures transactions and swaps and which is a
derivatives clearing organization registered with the
Commodity Futures Trading Commission under the Commodity
Exchange Act (7 U.S.C. 1 et seq.), shall be unconditionally
exempt from registration under this section solely for the
purpose of clearing security-based swaps, unless the
Commission finds that such derivatives clearing organization
is not subject to comparable, comprehensive supervision and
regulation by the Commodity Futures Trading Commission.
``(l) Modification of Core Principles.--The Commission may
conform the core principles established in this section to
reflect evolving United States and international
standards.''.
(c) Security-based Swap Execution Facilities.--The
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended by inserting after section 3C (as added by subsection
(a) of this section) the following:

``SEC. 3D. SECURITY-BASED SWAP EXECUTION FACILITIES.

``(a) Registration.--
``(1) In general.--No person may operate a facility for the
trading or processing of security-based swaps, unless the
facility is registered as a security-based swap execution
facility or as a national securities exchange under this
section.
``(2) Dual registration.--Any person that is registered as
a security-based swap execution facility under this section
shall register with the Commission regardless of whether the
person also is registered with the Commodity Futures Trading
Commission as a swap execution facility.
``(b) Trading and Trade Processing.--A security-based swap
execution facility that is registered under subsection (a)
may--
``(1) make available for trading any security-based swap;
and
``(2) facilitate trade processing of any security-based
swap.
``(c) Identification of Facility Used to Trade Security-
based Swaps by National Securities Exchanges.--A national
securities exchange shall, to the extent that the exchange
also operates a security-based swap execution facility and
uses the same electronic trade execution system for listing
and executing trades of security-based swaps on or through
the exchange and the facility, identify whether electronic
trading of such security-based swaps is taking place on or
through the national securities exchange or the security-
based swap execution facility.
``(d) Core Principles for Security-based Swap Execution
Facilities.--
``(1) Compliance with core principles.--
``(A) In general.--To be registered, and maintain
registration, as a security-based swap execution facility,
the security-based swap execution facility shall comply
with--
``(i) the core principles described in this subsection; and

[[Page S2898]]

``(ii) any requirement that the Commission may impose by
rule or regulation.
``(B) Reasonable discretion of security-based swap
execution facility.--Unless otherwise determined by the
Commission, by rule or regulation, a security-based swap
execution facility described in subparagraph (A) shall have
reasonable discretion in establishing the manner in which it
complies with the core principles described in this
subsection.
``(2) Compliance with rules.--A security-based swap
execution facility shall--
``(A) monitor and enforce compliance with any rule
established by such security-based swap execution facility,
including--
``(i) the terms and conditions of the security-based swaps
traded or processed on or through the facility; and
``(ii) any limitation on access to the facility;
``(B) establish and enforce trading, trade processing, and
participation rules that will deter abuses and have the
capacity to detect, investigate, and enforce those rules,
including means--
``(i) to provide market participants with impartial access
to the market; and
``(ii) to capture information that may be used in
establishing whether rule violations have occurred; and
``(C) establish rules governing the operation of the
facility, including rules specifying trading procedures to be
used in entering and executing orders traded or posted on the
facility, including block trades.
``(3) Security-based swaps not readily susceptible to
manipulation.--The security-based swap execution facility
shall permit trading only in security-based swaps that are
not readily susceptible to manipulation.
``(4) Monitoring of trading and trade processing.--The
security-based swap execution facility shall--
``(A) establish and enforce rules or terms and conditions
defining, or specifications detailing--
``(i) trading procedures to be used in entering and
executing orders traded on or through the facilities of the
security-based swap execution facility; and
``(ii) procedures for trade processing of security-based
swaps on or through the facilities of the security-based swap
execution facility; and
``(B) monitor trading in security-based swaps to prevent
manipulation, price distortion, and disruptions of the
delivery or cash settlement process through surveillance,
compliance, and disciplinary practices and procedures,
including methods for conducting real-time monitoring of
trading and comprehensive and accurate trade reconstructions.
``(5) Ability to obtain information.--The security-based
swap execution facility shall--
``(A) establish and enforce rules that will allow the
facility to obtain any necessary information to perform any
of the functions described in this subsection;
``(B) provide the information to the Commission on request;
and
``(C) have the capacity to carry out such international
information-sharing agreements as the Commission may require.
``(6) Position limits or accountability.--
``(A) In general.--To reduce the potential threat of market
manipulation or congestion, especially during trading in the
delivery month, a security-based swap execution facility that
is a trading facility shall adopt for each of the contracts
of the facility, as is necessary and appropriate, position
limitations or position accountability for speculators.
``(B) Position limits.--For any contract or agreement that
is subject to a position limitation established by the
Commission pursuant to section 10B, the security-based swap
execution facility shall set its position limitation at a
level no higher than the limitation established by the
Commission.
``(C) Position enforcement.--For any contract or agreement
that is subject to a position limitation established by the
Commission pursuant to section 10B, a security-based swap
execution facility shall reject any proposed security-based
swap transaction if, based on information readily available
to a security-based swap execution facility, any proposed
security-based swap transaction would cause a security-based
swap execution facility customer that would be a party to
such swap transaction to exceed such position limitation.
``(7) Financial integrity of transactions.--The security-
based swap execution facility shall establish and enforce
rules and procedures for ensuring the financial integrity of
security-based swaps entered on or through the facilities of
the security-based swap execution facility, including the
clearance and settlement of security-based swaps pursuant to
section 3C(a)(1).
``(8) Emergency authority.--The security-based swap
execution facility shall adopt rules to provide for the
exercise of emergency authority, in consultation or
cooperation with the Commission, as is necessary and
appropriate, including the authority to liquidate or transfer
open positions in any security-based swap or to suspend or
curtail trading in a security-based swap.
``(9) Timely publication of trading information.--
``(A) In general.--The security-based swap execution
facility shall make public timely information on price,
trading volume, and other trading data on security-based
swaps to the extent prescribed by the Commission.
``(B) Capacity of security-based swap execution facility.--
The security-based swap execution facility shall be required
to have the capacity to electronically capture trade
information with respect to transactions executed on the
facility.
``(10) Recordkeeping and reporting.--
``(A) In general.--A security-based swap execution facility
shall--
``(i) maintain records of all activities relating to the
business of the facility, including a complete audit trail,
in a form and manner acceptable to the Commission for a
period of 5 years; and
``(ii) report to the Commission, in a form and manner
acceptable to the Commission, such information as the
Commission determines to be necessary or appropriate for the
Commission to perform the duties of the Commission under this
title.
``(B) Requirements.--The Commission shall adopt data
collection and reporting requirements for security-based swap
execution facilities that are comparable to corresponding
requirements for clearing agencies and security-based swap
data repositories.
``(11) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this title, the
security-based swap execution facility shall not--
``(A) adopt any rules or taking any actions that result in
any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on trading
or clearing.
``(12) Conflicts of interest.--The security-based swap
execution facility shall--
``(A) establish and enforce rules to minimize conflicts of
interest in its decision-making process; and
``(B) establish a process for resolving the conflicts of
interest.
``(13) Financial resources.--
``(A) In general.--The security-based swap execution
facility shall have adequate financial, operational, and
managerial resources to discharge each responsibility of the
security-based swap execution facility, as determined by the
Commission.
``(B) Determination of resource adequacy.--The financial
resources of a security-based swap execution facility shall
be considered to be adequate if the value of the financial
resources--
``(i) enables the organization to meet its financial
obligations to its members and participants notwithstanding a
default by the member or participant creating the largest
financial exposure for that organization in extreme but
plausible market conditions; and
``(ii) exceeds the total amount that would enable the
security-based swap execution facility to cover the operating
costs of the security-based swap execution facility for a 1-
year period, as calculated on a rolling basis.
``(14) System safeguards.--The security-based swap
execution facility shall--
``(A) establish and maintain a program of risk analysis and
oversight to identify and minimize sources of operational
risk, through the development of appropriate controls and
procedures, and automated systems, that--
``(i) are reliable and secure; and
``(ii) have adequate scalable capacity;
``(B) establish and maintain emergency procedures, backup
facilities, and a plan for disaster recovery that are
designed to allow for--
``(i) the timely recovery and resumption of operations; and
``(ii) the fulfillment of the responsibilities and
obligation of the security-based swap execution facility; and
``(C) periodically conduct tests to verify that the backup
resources of the security-based swap execution facility are
sufficient to ensure continued--
``(i) order processing and trade matching;
``(ii) price reporting;
``(iii) market surveillance; and
``(iv) maintenance of a comprehensive and accurate audit
trail.
``(15) Designation of chief compliance officer.--
``(A) In general.--Each security-based swap execution
facility shall designate an individual to serve as a chief
compliance officer.
``(B) Duties.--The chief compliance officer shall--
``(i) report directly to the board or to the senior officer
of the facility;
``(ii) review compliance with the core principles in this
subsection;
``(iii) in consultation with the board of the facility, a
body performing a function similar to that of a board, or the
senior officer of the facility, resolve any conflicts of
interest that may arise;
``(iv) be responsible for establishing and administering
the policies and procedures required to be established
pursuant to this section;
``(v) ensure compliance with this title and the rules and
regulations issued under this title, including rules
prescribed by the Commission pursuant to this section;
``(vi) establish procedures for the remediation of
noncompliance issues found during--

``(I) compliance office reviews;
``(II) look backs;
``(III) internal or external audit findings;
``(IV) self-reported errors; or
``(V) through validated complaints; and

``(vii) establish and follow appropriate procedures for the
handling, management response, remediation, retesting, and
closing of noncompliance issues.

[[Page S2899]]

``(C) Annual reports.--
``(i) In general.--In accordance with rules prescribed by
the Commission, the chief compliance officer shall annually
prepare and sign a report that contains a description of--

``(I) the compliance of the security-based swap execution
facility with this title; and
``(II) the policies and procedures, including the code of
ethics and conflict of interest policies, of the security-
based security-based swap execution facility.

``(ii) Requirements.--The chief compliance officer shall--

``(I) submit each report described in clause (i) with the
appropriate financial report of the security-based swap
execution facility that is required to be submitted to the
Commission pursuant to this section; and
``(II) include in the report a certification that, under
penalty of law, the report is accurate and complete.

``(e) Exemptions.--The Commission may exempt, conditionally
or unconditionally, a security-based swap execution facility
from registration under this section if the Commission finds
that the facility is subject to comparable, comprehensive
supervision and regulation on a consolidated basis by the
Commodity Futures Trading Commission.
``(f) Rules.--The Commission shall prescribe rules
governing the regulation of security-based swap execution
facilities under this section.''.
(d) Segregation of Assets Held as Collateral in Security-
based Swap Transactions.--The Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.) is amended by inserting after section
3D (as added by subsection (b)) the following:

``SEC. 3E. SEGREGATION OF ASSETS HELD AS COLLATERAL IN
SECURITY-BASED SWAP TRANSACTIONS.

``(a) Registration Requirement.--It shall be unlawful for
any person to accept any money, securities, or property (or
to extend any credit in lieu of money, securities, or
property) from, for, or on behalf of a security-based swaps
customer or to margin, guarantee, or secure a security-based
swap cleared by or through a clearing agency (including
money, securities, or property accruing to the customer as
the result of such a security-based swap), unless the person
shall have registered under this title with the Commission as
a broker, dealer, or security-based swap dealer, and the
registration shall not have expired nor been suspended nor
revoked.
``(b) Cleared Security-based Swaps.--
``(1) Segregation required.--A broker, dealer, or security-
based swap dealer shall treat and deal with all money,
securities, and property of any security-based swaps customer
received to margin, guarantee, or secure a security-based
swap cleared by or though a clearing agency (including money,
securities, or property accruing to the security-based swaps
customer as the result of such a security-based swap) as
belonging to the security-based swaps customer.
``(2) Commingling prohibited.--Money, securities, and
property of a security-based swaps customer described in
paragraph (1) shall be separately accounted for and shall not
be commingled with the funds of the broker, dealer, or
security-based swap dealer or be used to margin, secure, or
guarantee any trades or contracts of any security-based swaps
customer or person other than the person for whom the same
are held.
``(c) Exceptions.--
``(1) Use of funds.--
``(A) In general.--Notwithstanding subsection (b), money,
securities, and property of a security-based swaps customer
of a broker, dealer, or security-based swap dealer described
in subsection (b) may, for convenience, be commingled and
deposited in the same 1 or more accounts with any bank or
trust company or with a clearing agency.
``(B) Withdrawal.--Notwithstanding subsection (b), such
share of the money, securities, and property described in
subparagraph (A) as in the normal course of business shall be
necessary to margin, guarantee, secure, transfer, adjust, or
settle a cleared security-based swap with a clearing agency,
or with any member of the clearing agency, may be withdrawn
and applied to such purposes, including the payment of
commissions, brokerage, interest, taxes, storage, and other
charges, lawfully accruing in connection with the cleared
security-based swap.
``(2) Commission action.--Notwithstanding subsection (b),
in accordance with such terms and conditions as the
Commission may prescribe by rule, regulation, or order, any
money, securities, or property of the security-based swaps
customer of a broker, dealer, or security-based swap dealer
described in subsection (b) may be commingled and deposited
as provided in this section with any other money, securities,
or property received by the broker, dealer, or security-based
swap dealer and required by the Commission to be separately
accounted for and treated and dealt with as belonging to the
security-based swaps customer of the broker, dealer, or
security-based swap dealer.
``(d) Permitted Investments.--Money described in subsection
(b) may be invested in obligations of the United States, in
general obligations of any State or of any political
subdivision of a State, and in obligations fully guaranteed
as to principal and interest by the United States, or in any
other investment that the Commission may by rule or
regulation prescribe, and such investments shall be made in
accordance with such rules and regulations and subject to
such conditions as the Commission may prescribe.
``(e) Prohibition.--It shall be unlawful for any person,
including any clearing agency and any depository institution,
that has received any money, securities, or property for
deposit in a separate account or accounts as provided in
subsection (b) to hold, dispose of, or use any such money,
securities, or property as belonging to the depositing
broker, dealer, or security-based swap dealer or any person
other than the swaps customer of the broker, dealer, or
security-based swap dealer.''.
(e) Trading in Security-based Swaps.--Section 6 of the
Securities Exchange Act of 1934 (15 U.S.C. 78f) is amended by
adding at the end the following:
``(l) Security-based Swaps.--It shall be unlawful for any
person to effect a transaction in a security-based swap with
or for a person that is not an eligible contract participant,
unless such transaction is effected on a national securities
exchange registered pursuant to subsection (b).''.
(f) Additions of Security-based Swaps to Certain
Enforcement Provisions.--Section 9(b) of the Securities
Exchange Act of 1934 (15 U.S.C. 78i(b)) is amended by
striking paragraphs (1) through (3) and inserting the
following:
``(1) any transaction in connection with any security
whereby any party to such transaction acquires--
``(A) any put, call, straddle, or other option or privilege
of buying the security from or selling the security to
another without being bound to do so;
``(B) any security futures product on the security; or
``(C) any security-based swap involving the security or the
issuer of the security;
``(2) any transaction in connection with any security with
relation to which such person has, directly or indirectly,
any interest in any--
``(A) such put, call, straddle, option, or privilege;
``(B) such security futures product; or
``(C) such security-based swap; or
``(3) any transaction in any security for the account of
any person who such person has reason to believe has, and who
actually has, directly or indirectly, any interest in any--
``(A) such put, call, straddle, option, or privilege;
``(B) such security futures product with relation to such
security; or
``(C) any security-based swap involving such security or
the issuer of such security.''.
(g) Rulemaking Authority to Prevent Fraud, Manipulation and
Deceptive Conduct in Security-based Swaps.--Section 9 of the
Securities Exchange Act of 1934 (15 U.S.C. 78i) is amended by
adding at the end the following:
``(j) It shall be unlawful for any person, directly or
indirectly, by the use of any means or instrumentality of
interstate commerce or of the mails, or of any facility of
any national securities exchange, to effect any transaction
in, or to induce or attempt to induce the purchase or sale
of, any security-based swap, in connection with which such
person engages in any fraudulent, deceptive, or manipulative
act or practice, makes any fictitious quotation, or engages
in any transaction, practice, or course of business which
operates as a fraud or deceit upon any person. The Commission
shall, for the purposes of this subsection, by rules and
regulations define, and prescribe means reasonably designed
to prevent, such transactions, acts, practices, and courses
of business as are fraudulent, deceptive, or manipulative,
and such quotations as are fictitious.''.
(h) Position Limits and Position Accountability for
Security-based Swaps.--The Securities Exchange Act of 1934 is
amended by inserting after section 10A (15 U.S.C. 78j-1) the
following:

``SEC. 10B. POSITION LIMITS AND POSITION ACCOUNTABILITY FOR
SECURITY-BASED SWAPS AND LARGE TRADER
REPORTING.

``(a) Position Limits.--As a means reasonably designed to
prevent fraud and manipulation, the Commission shall, by rule
or regulation, as necessary or appropriate in the public
interest or for the protection of investors, establish limits
(including related hedge exemption provisions) on the size of
positions in any security-based swap that may be held by any
person. In establishing such limits, the Commission may
require any person to aggregate positions in--
``(1) any security-based swap and any security or loan or
group of securities or loans on which such security-based
swap is based, which such security-based swap references, or
to which such security-based swap is related as described in
paragraph (68) of section 3(a), and any other instrument
relating to such security or loan or group or index of
securities or loans; or
``(2) any security-based swap and--
``(A) any security or group or index of securities, the
price, yield, value, or volatility of which, or of which any
interest therein, is the basis for a material term of such
security-based swap as described in paragraph (68) of section
3(a); and
``(B) any other instrument relating to the same security or
group or index of securities described under subparagraph
(A).
``(b) Exemptions.--The Commission, by rule, regulation, or
order, may conditionally or unconditionally exempt any person
or class of persons, any security-based swap or class of
security-based swaps, or any transaction or class of
transactions from any requirement the Commission may
establish under this section with respect to position limits.

[[Page S2900]]

``(c) SRO Rules.--
``(1) In general.--As a means reasonably designed to
prevent fraud or manipulation, the Commission, by rule,
regulation, or order, as necessary or appropriate in the
public interest, for the protection of investors, or
otherwise in furtherance of the purposes of this title, may
direct a self-regulatory organization--
``(A) to adopt rules regarding the size of positions in any
security-based swap that may be held by--
``(i) any member of such self-regulatory organization; or
``(ii) any person for whom a member of such self-regulatory
organization effects transactions in such security-based
swap; and
``(B) to adopt rules reasonably designed to ensure
compliance with requirements prescribed by the Commission
under this subsection.
``(2) Requirement to aggregate positions.--In establishing
the limits under paragraph (1), the self-regulatory
organization may require such member or person to aggregate
positions in--
``(A) any security-based swap and any security or loan or
group or narrow-based security narrow-based security index of
securities or loans on which such security-based swap is
based, which such security-based swap references, or to which
such security-based swap is related as described in section
3(a)(68), and any other instrument relating to such security
or loan or group or narrow-based security index of securities
or loans; or
``(B)(i) any security-based swap; and
``(ii) any security-based swap and any other instrument
relating to the same security or group or narrow-based
security index of securities.
``(d) Large Trader Reporting.--The Commission, by rule or
regulation, may require any person that effects transactions
for such person's own account or the account of others in any
securities-based swap or uncleared security-based swap and
any security or loan or group or narrow-based security index
of securities or loans as set forth in paragraphs (1) and (2)
of subsection (a) under this section to report such
information as the Commission may prescribe regarding any
position or positions in any security-based swap or uncleared
security-based swap and any security or loan or group or
narrow-based security index of securities or loans and any
other instrument relating to such security or loan or group
or narrow-based security index of securities or loans as set
forth in paragraphs (1) and (2) of subsection (a) under this
section.''.
(i) Public Reporting and Repositories for Security-based
Swaps.--Section 13 of the Securities Exchange Act of 1934 (15
U.S.C. 78m) is amended by adding at the end the following:
``(m) Public Availability of Security-based Swap
Transaction Data.--
``(1) In general.--
``(A) Definition of real-time public reporting.--In this
paragraph, the term `real-time public reporting' means to
report data relating to a security-based swap transaction as
soon as technologically practicable after the time at which
the security-based swap transaction has been executed.
``(B) Purpose.--The purpose of this section is to authorize
the Commission to make security-based swap transaction and
pricing data available to the public in such form and at such
times as the Commission determines appropriate to enhance
price discovery.
``(C) General rule.--The Commission is authorized to
provide by rule for the public availability of security-based
swap transaction and pricing data as follows:
``(i) With respect to those security-based swaps that are
subject to the mandatory clearing requirement described in
section 3C(a)(1) (including those security-based swaps that
are exempted from the requirement pursuant to section
3C(a)(10)), the Commission shall require real-time public
reporting for such transactions.
``(ii) With respect to those security-based swaps that are
not subject to the mandatory clearing requirement described
in subsection section 3C(a)(1), but are cleared at a
registered clearing agency, the Commission shall require
real-time public reporting for such transactions.
``(iii) With respect to security-based swaps that are not
cleared at a registered clearing agency and which are
reported to a security-based swap data repository or the
Commission under section 3C(a), the Commission shall make
available to the public, in a manner that does not disclose
the business transactions and market positions of any person,
aggregate data on such security-based swap trading volumes
and positions.
``(iv) With respect to security-based swaps that are exempt
from the requirements of section 3C(a)(1), but are subject to
the requirements of section 3C(a)(8), the Commission shall
require real-time public reporting for such transactions.
``(D) Registered entities and public reporting.--The
Commission may require registered entities to publicly
disseminate the security-based swap transaction and pricing
data required to be reported under this paragraph.
``(E) Rulemaking required.--With respect to the rule
providing for the public availability of transaction and
pricing data for security-based swaps described in clauses
(i) and (ii) of subparagraph (C), the rule promulgated by the
Commission shall contain provisions--
``(i) to ensure such information does not identify the
participants;
``(ii) to specify the criteria for determining what
constitutes a large notional security-based swap transaction
(block trade) for particular markets and contracts;
``(iii) to specify the appropriate time delay for reporting
large notional security-based swap transactions (block
trades) to the public; and
``(iv) that take into account whether the public disclosure
will materially reduce market liquidity.
``(F) Timeliness of reporting.--Parties to a security-based
swap (including agents of the parties to a security-based
swap) shall be responsible for reporting security-based swap
transaction information to the appropriate registered entity
in a timely manner as may be prescribed by the Commission.
``(2) Semiannual and annual public reporting of aggregate
security-based swap data.--
``(A) In general.--In accordance with subparagraph (B), the
Commission shall issue a written report on a semiannual and
annual basis to make available to the public information
relating to--
``(i) the trading and clearing in the major security-based
swap categories; and
``(ii) the market participants and developments in new
products.
``(B) Use; consultation.--In preparing a report under
subparagraph (A), the Commission shall--
``(i) use information from security-based swap data
repositories and derivatives clearing organizations; and
``(ii) consult with the Office of the Comptroller of the
Currency, the Bank for International Settlements, and such
other regulatory bodies as may be necessary.
``(n) Security-based Swap Data Repositories.--
``(1) Registration requirement.--It shall be unlawful for
any person, unless registered with the Commission, directly
or indirectly, to make use of the mails or any means or
instrumentality of interstate commerce to perform the
functions of a security-based swap data repository.
``(2) Inspection and examination.--Each registered
security-based swap data repository shall be subject to
inspection and examination by any representative of the
Commission.
``(3) Compliance with core principles.--
``(A) In general.--To be registered, and maintain
registration, as a security-based swap data repository, the
security-based swap data repository shall comply with--
``(i) the core principles described in this subsection; and
``(ii) any requirement that the Commission may impose by
rule or regulation.
``(B) Reasonable discretion of security-based swap data
repository.--Unless otherwise determined by the Commission,
by rule or regulation, a security-based swap data repository
described in subparagraph (A) shall have reasonable
discretion in establishing the manner in which the security-
based swap data repository complies with the core principles
described in this subsection.
``(4) Standard setting.--
``(A) Data identification.--The Commission shall prescribe
standards that specify the data elements for each security-
based swap that shall be collected and maintained by each
registered security-based swap data repository.
``(B) Data collection and maintenance.--The Commission
shall prescribe data collection and data maintenance
standards for security-based swap data repositories.
``(C) Comparability.--The standards prescribed by the
Commission under this subsection shall be comparable to the
data standards imposed by the Commission on clearing agencies
in connection with their clearing of security-based swaps.
``(5) Duties.--A security-based swap data repository
shall--
``(A) accept data prescribed by the Commission for each
security-based swap under subsection (b);
``(B) confirm with both counterparties to the security-
based swap the accuracy of the data that was submitted;
``(C) maintain the data described in subparagraph (A) in
such form, in such manner, and for such period as may be
required by the Commission;
``(D)(i) provide direct electronic access to the Commission
(or any designee of the Commission, including another
registered entity); and
``(ii) provide the information described in subparagraph
(A) in such form and at such frequency as the Commission may
require to comply with the public reporting requirements set
forth in subsection (m);
``(E) at the direction of the Commission, establish
automated systems for monitoring, screening, and analyzing
security-based swap data;
``(F) maintain the privacy of any and all security-based
swap transaction information that the security-based swap
data repository receives from a security-based swap dealer,
counterparty, or any other registered entity; and
``(G) on a confidential basis pursuant to section 24, upon
request, and after notifying the Commission of the request,
make available all data obtained by the security-based swap
data repository, including individual counterparty trade and
position data, to--
``(i) each appropriate prudential regulator;
``(ii) the Financial Stability Oversight Council;

[[Page S2901]]

``(iii) the Commodity Futures Trading Commission;
``(iv) the Department of Justice; and
``(v) any other person that the Commission determines to be
appropriate, including--

``(I) foreign financial supervisors (including foreign
futures authorities);
``(II) foreign central banks; and
``(III) foreign ministries.

``(H) Confidentiality and indemnification agreement.--
Before the security-based swap data repository may share
information with any entity described in subparagraph (G)--
``(i) the security-based swap data repository shall receive
a written agreement from each entity stating that the entity
shall abide by the confidentiality requirements described in
section 24 relating to the information on security-based swap
transactions that is provided; and
``(ii) each entity shall agree to indemnify the security-
based swap data repository and the Commission for any
expenses arising from litigation relating to the information
provided under section 24.
``(6) Designation of chief compliance officer.--
``(A) In general.--Each security-based swap data repository
shall designate an individual to serve as a chief compliance
officer.
``(B) Duties.--The chief compliance officer shall--
``(i) report directly to the board or to the senior officer
of the security-based swap data repository;
``(ii) review the compliance of the security-based swap
data repository with respect to the core principles described
in paragraph (7);
``(iii) in consultation with the board of the security-
based swap data repository, a body performing a function
similar to the board of the security-based swap data
repository, or the senior officer of the security-based swap
data repository, resolve any conflicts of interest that may
arise;
``(iv) be responsible for administering each policy and
procedure that is required to be established pursuant to this
section;
``(v) ensure compliance with this title (including
regulations) relating to agreements, contracts, or
transactions, including each rule prescribed by the
Commission under this section;
``(vi) establish procedures for the remediation of
noncompliance issues identified by the chief compliance
officer through any--

``(I) compliance office review;
``(II) look-back;
``(III) internal or external audit finding;
``(IV) self-reported error; or
``(V) validated complaint; and

``(vii) establish and follow appropriate procedures for the
handling, management response, remediation, retesting, and
closing of noncompliance issues.
``(C) Annual reports.--
``(i) In general.--In accordance with rules prescribed by
the Commission, the chief compliance officer shall annually
prepare and sign a report that contains a description of--

``(I) the compliance of the security-based swap data
repository of the chief compliance officer with respect to
this title (including regulations); and
``(II) each policy and procedure of the security-based swap
data repository of the chief compliance officer (including
the code of ethics and conflict of interest policies of the
security-based swap data repository).

``(ii) Requirements.--A compliance report under clause (i)
shall--

``(I) accompany each appropriate financial report of the
security-based swap data repository that is required to be
furnished to the Commission pursuant to this section; and
``(II) include a certification that, under penalty of law,
the compliance report is accurate and complete.

``(7) Core principles applicable to security-based swap
data repositories.--
``(A) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this title, the swap
data repository shall not--
``(i) adopt any rule or take any action that results in any
unreasonable restraint of trade; or
``(ii) impose any material anticompetitive burden on the
trading, clearing, or reporting of transactions.
``(B) Governance arrangements.--Each security-based swap
data repository shall establish governance arrangements that
are transparent--
``(i) to fulfill public interest requirements; and
``(ii) to support the objectives of the Federal Government,
owners, and participants.
``(C) Conflicts of interest.--Each security-based swap data
repository shall--
``(i) establish and enforce rules to minimize conflicts of
interest in the decision-making process of the security-based
swap data repository; and
``(ii) establish a process for resolving any conflicts of
interest described in clause (i).
``(8) Required registration for security-based swap data
repositories.--Any person that is required to be registered
as a security-based swap data repository under this
subsection shall register with the Commission, regardless of
whether that person is also licensed under the Commodity
Exchange Act as a swap data repository.
``(9) Rules.--The Commission shall adopt rules governing
persons that are registered under this subsection.''.

SEC. 764. REGISTRATION AND REGULATION OF SECURITY-BASED SWAP
DEALERS AND MAJOR SECURITY-BASED SWAP
PARTICIPANTS.

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended by inserting after section 15E (15 U.S.C. 78o-7)
the following:

``SEC. 15F. REGISTRATION AND REGULATION OF SECURITY-BASED
SWAP DEALERS AND MAJOR SECURITY-BASED SWAP
PARTICIPANTS.

``(a) Registration.--
``(1) Security-based swap dealers.--It shall be unlawful
for any person to act as a security-based swap dealer unless
the person is registered as a security-based swap dealer with
the Commission.
``(2) Major security-based swap participants.--It shall be
unlawful for any person to act as a major security-based swap
participant unless the person is registered as a major
security-based swap participant with the Commission.
``(b) Requirements.--
``(1) In general.--A person shall register as a security-
based swap dealer or major security-based swap participant by
filing a registration application with the Commission.
``(2) Contents.--
``(A) In general.--The application shall be made in such
form and manner as prescribed by the Commission, and shall
contain such information, as the Commission considers
necessary concerning the business in which the applicant is
or will be engaged.
``(B) Continual reporting.--A person that is registered as
a security-based swap dealer or major security-based swap
participant shall continue to submit to the Commission
reports that contain such information pertaining to the
business of the person as the Commission may require.
``(3) Expiration.--Each registration under this section
shall expire at such time as the Commission may prescribe by
rule or regulation.
``(4) Rules.--Except as provided in subsections (c), (e),
and (f), the Commission may prescribe rules applicable to
security-based swap dealers and major security-based swap
participants, including rules that limit the activities of
non-bank security-based swap dealers and non-bank major
security-based swap participants.
``(5) Transition.--Not later than 1 year after the date of
enactment of the Wall Street Transparency and Accountability
Act of 2010, the Commission shall issue rules under this
section to provide for the registration of security-based
swap dealers and major security-based swap participants.
``(6) Statutory disqualification.--Except to the extent
otherwise specifically provided by rule, regulation, or order
of the Commission, it shall be unlawful for a security-based
swap dealer or a major security-based swap participant to
permit any person associated with a security-based swap
dealer or a major security-based swap participant who is
subject to a statutory disqualification to effect or be
involved in effecting security-based swaps on behalf of the
security-based swap dealer or major security-based swap
participant, if the security-based swap dealer or major
security-based swap participant knew, or in the exercise of
reasonable care should have known, of the statutory
disqualification.
``(c) Dual Registration.--
``(1) Security-based swap dealer.--Any person that is
required to be registered as a security-based swap dealer
under this section shall register with the Commission,
regardless of whether the person also is registered with the
Commodity Futures Trading Commission as a swap dealer.
``(2) Major security-based swap participant.--Any person
that is required to be registered as a major security-based
swap participant under this section shall register with the
Commission, regardless of whether the person also is
registered with the Commodity Futures Trading Commission as a
major swap participant.
``(d) Rulemaking.--
``(1) In general.--The Commission shall adopt rules for
persons that are registered as security-based swap dealers or
major security-based swap participants under this section.
``(2) Exception for prudential requirements.--
``(A) In general.--The Commission may not prescribe rules
imposing prudential requirements on security-based swap
dealers or major security-based swap participants that are
depository institutions, as that term is defined in section 3
of the Federal Deposit Insurance Act (12 U.S.C. 1813).
``(B) Applicability.--Subparagraph (A) does not limit the
authority of the Commission to prescribe appropriate business
conduct, reporting, and recordkeeping requirements on
security-based swap dealers or major security-based swap
participants that are depository institutions to protect
investors.
``(e) Capital and Margin Requirements.--
``(1) In general.--
``(A) Security-based swap dealers and major security-based
swap participants that are depository institutions.--Each
registered security-based swap dealer and major security-
based swap participant that is a depository institution, as
that term is defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813), shall meet such minimum
capital requirements and minimum initial and variation margin
requirements as the appropriate Federal banking agency shall
by rule or regulation prescribe under paragraph (2)(A) to
help ensure the safety and soundness of the security-

[[Page S2902]]

based swap dealer or major security-based swap participant.
``(B) Security-based swap dealers and major security-based
swap participants that are not depository institutions.--Each
registered security-based swap dealer and major security-
based swap participant that is not a depository institution,
as that term is defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813), shall meet such minimum
capital requirements and minimum initial and variation margin
requirements as the Commission shall by rule or regulation
prescribe under paragraph (2)(B) to help ensure the safety
and soundness of the security-based swap dealer or major
security-based swap participant.
``(2) Rules.--
``(A) Security-based swap dealers and major security-based
swap participants that are depository institutions.--The
appropriate Federal banking agencies, in consultation with
the Commission and the Commodity Futures Trading Commission,
shall adopt rules imposing capital and margin requirements
under this subsection for security-based swap dealers and
major security-based swap participants that are depository
institutions, as that term is defined in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813).
``(B) Security-based swap dealers and major security-based
swap participants that are not depository institutions.--The
Commission shall adopt rules imposing capital and margin
requirements under this subsection for security-based swap
dealers and major security-based swap participants that are
not depository institutions, as that term is defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813).
``(3) Capital.--
``(A) Security-based swap dealers and major security-based
swap participants that are depository institutions.--The
capital requirements prescribed under paragraph (2)(A) for
security-based swap dealers and major security-based swap
participants that are depository institutions shall contain--
``(i) a capital requirement that is greater than zero for
security-based swaps that are cleared by a clearing agency;
and
``(ii) to offset the greater risk to the security-based
swap dealer or major security-based swap participant and to
the financial system arising from the use of security-based
swaps that are not cleared, substantially higher capital
requirements for security-based swaps that are not cleared by
a clearing agency than for security-based swaps that are
cleared.
``(B) Security-based swap dealers and major security-based
swap participants that are not depository institutions.--The
capital requirements prescribed under paragraph (2)(B) for
security-based swap dealers and major security-based swap
participants that are not depository institutions shall be as
strict as or stricter than the capital requirements
prescribed for security-based swap dealers and major
security-based swap participants that are depository
institutions under paragraph (2)(A).
``(C) Rule of construction.--
``(i) In general.--Nothing in this section shall limit, or
be construed to limit, the authority--

``(I) of the Commission to set financial responsibility
rules for a broker or dealer registered pursuant to section
15(b) (except for section 15(b)(11) thereof) in accordance
with section 15(c)(3); or
``(II) of the Commodity Futures Trading Commission to set
financial responsibility rules for a futures commission
merchant or introducing broker registered pursuant to section
4f(a) of the Commodity Exchange Act (except for section
4f(a)(3) thereof) in accordance with section 4f(b) of the
Commodity Exchange Act.

``(ii) Futures commission merchants and other dealers.--A
futures commission merchant, introducing broker, broker, or
dealer shall maintain sufficient capital to comply with the
stricter of any applicable capital requirements to which such
futures commission merchant, introducing broker, broker, or
dealer is subject to under this title or the Commodity
Exchange Act.
``(4) Margin.--
``(A) Security-based swap dealers and major security-based
swap participants that are depository institutions.--The
appropriate Federal banking agency for security-based swap
dealers and major security-based swap participants that are
depository institutions shall impose both initial and
variation margin requirements in accordance with paragraph
(2)(A) on all security-based swaps that are not cleared by a
clearing agency.
``(B) Security-based swap dealers and major security-based
swap participants that are not depository institutions.--The
Commission shall impose both initial and variation margin
requirements in accordance with paragraph (2)(B) for
security-based swap dealers and major security-based swap
participants that are not depository institutions on all
security-based swaps that are not cleared by a clearing
agency. Any such initial and variation margin requirements
shall be as strict as or stricter than the margin
requirements prescribed under paragraph (4)(A).
``(5) Margin requirements.--In prescribing margin
requirements under this subsection, the appropriate Federal
banking agency with respect to security-based swap dealers
and major security-based swap participants that are
depository institutions, and the Commission with respect to
security-based swap dealers and major security-based swap
participants that are not depository institutions may permit
the use of noncash collateral, as the agency or the
Commission determines to be consistent with--
``(A) preserving the financial integrity of markets trading
security-based swaps; and
``(B) preserving the stability of the United States
financial system.
``(6) Comparability of capital and margin requirements.--
``(A) In general.--The appropriate Federal banking
agencies, the Commission, and the Securities and Exchange
Commission shall periodically (but not less frequently than
annually) consult on minimum capital requirements and minimum
initial and variation margin requirements.
``(B) Comparability.--The entities described in
subparagraph (A) shall, to the maximum extent practicable,
establish and maintain comparable minimum capital
requirements and minimum initial and variation margin
requirements, including the use of noncash collateral, for--
``(i) security-based swap dealers; and
``(ii) major security-based swap participants.
``(7) Requested margin.--If any party to a security-based
swap that is exempt from the margin requirements of paragraph
(4)(A) or paragraph (4)(B) requests that such security-based
swap be margined, then--
``(A) the exemption shall not apply; and
``(B) the counterparty to such security-based swap shall
provide the requested margin.
``(8) Applicability with respect to counterparties.--
Paragraphs (4) and (5) shall not apply to initial and
variation margin for security-based swaps in which 1 of the
counterparties is not--
``(A) a security-based swap dealer;
``(B) a major security-based swap participant; or
``(C) a financial entity as described in section
3C(a)(10)(A)(ii), and such counterparty is eligible for and
utilizing the commercial end user clearing exemption under
section 3C(a)(10).
``(f) Reporting and Recordkeeping.--
``(1) In general.--Each registered security-based swap
dealer and major security-based swap participant--
``(A) shall make such reports as are required by the
Commission, by rule or regulation, regarding the transactions
and positions and financial condition of the registered
security-based swap dealer or major security-based swap
participant;
``(B)(i) for which there is a prudential regulator, shall
keep books and records of all activities related to the
business as a security-based swap dealer or major security-
based swap participant in such form and manner and for such
period as may be prescribed by the Commission by rule or
regulation; and
``(ii) for which there is no prudential regulator, shall
keep books and records in such form and manner and for such
period as may be prescribed by the Commission by rule or
regulation; and
``(C) shall keep books and records described in
subparagraph (B) open to inspection and examination by any
representative of the Commission.
``(2) Rules.--The Commission shall adopt rules governing
reporting and recordkeeping for security-based swap dealers
and major security-based swap participants.
``(g) Daily Trading Records.--
``(1) In general.--Each registered security-based swap
dealer and major security-based swap participant shall
maintain daily trading records of the security-based swaps of
the registered security-based swap dealer and major security-
based swap participant and all related records (including
related cash or forward transactions) and recorded
communications, including electronic mail, instant messages,
and recordings of telephone calls, for such period as may be
required by the Commission by rule or regulation.
``(2) Information requirements.--The daily trading records
shall include such information as the Commission shall
require by rule or regulation.
``(3) Customer records.--Each registered security-based
swap dealer and major security-based swap participant shall
maintain daily trading records for each customer or
counterparty in a manner and form that is identifiable with
each security-based swap transaction.
``(4) Audit trail.--Each registered security-based swap
dealer and major security-based swap participant shall
maintain a complete audit trail for conducting comprehensive
and accurate trade reconstructions.
``(5) Rules.--The Commission shall adopt rules governing
daily trading records for security-based swap dealers and
major security-based swap participants.
``(h) Business Conduct Standards.--
``(1) In general.--Each registered security-based swap
dealer and major security-based swap participant shall
conform with such business conduct standards as may be
prescribed by the Commission, by rule or regulation, that
relate to--
``(A) fraud, manipulation, and other abusive practices
involving security-based swaps (including security-based
swaps that are offered but not entered into);
``(B) diligent supervision of the business of the
registered security-based swap dealer and major security-
based swap participant;
``(C) adherence to all applicable position limits; and

[[Page S2903]]

``(D) such other matters as the Commission determines to be
appropriate.
``(2) Special rule; fiduciary duties to certain entities.--
``(A) Governmental entities.--A security-based swap dealer
that provides advice regarding, or offers to enter into, or
enters into a security-based swap with a State, State agency,
city, county, municipality, or other political subdivision of
a State, or a Federal agency shall have a fiduciary duty to
the State, State agency, city, county, municipality, or other
political subdivision of the State, or the Federal agency, as
appropriate.
``(B) Pension plans; endowments; retirement plans.--A
security-based swap dealer that provides advice regarding, or
offers to enter into, or enters into a security-based swap
with a pension plan, endowment, or retirement plan shall have
a fiduciary duty to the pension plan, endowment, or
retirement plan, as appropriate.
``(3) Business conduct requirements.--Business conduct
requirements adopted by the Commission under this subsection
shall--
``(A) establish the standard of care for a security-based
swap dealer or major security-based swap participant to
verify that any counterparty meets the eligibility standards
for an eligible contract participant;
``(B) require disclosure by the security-based swap dealer
or major security-based swap participant to any counterparty
to the transaction (other than a security-based swap dealer
or a major security-based swap participant) of--
``(i) information about the material risks and
characteristics of the security-based swap;
``(ii) the source and amount of any fees or other material
remuneration that the security-based swap dealer or major
security-based swap participant would directly or indirectly
expect to receive in connection with the security-based swap;
``(iii) any other material incentives or conflicts of
interest that the security-based swap dealer or major
security-based swap participant may have in connection with
the security-based swap; and
``(iv)(I) for cleared security-based swaps, upon the
request of the counterparty, the daily mark from the
appropriate clearing agency; and
``(II) for uncleared security-based swaps, the daily mark
of the security-based swap dealer or the major security-based
swap participant;
``(C) establish a standard of conduct for a security-based
swap dealer or major security-based swap participant to
communicate in a fair and balanced manner based on principles
of fair dealing and good faith;
``(D) establish a standard of conduct for a security-based
swap dealer or major security-based swap participant, with
respect to a counterparty that is an eligible contract
participant within the meaning of subclause (I) or (II) of
clause (vii) of section 1a(18) of the Commodity Exchange Act,
to have a reasonable basis to believe that the counterparty
has an independent representative that--
``(i) has sufficient knowledge to evaluate the transaction
and risks;
``(ii) is not subject to a statutory disqualification;
``(iii) is independent of the security-based swap dealer or
major security-based swap participant;
``(iv) undertakes a duty to act in the best interests of
the counterparty it represents;
``(v) makes appropriate disclosures; and
``(vi) will provide written representations to the eligible
contract participant regarding fair pricing and the
appropriateness of the transaction; and
``(E) establish such other standards and requirements as
the Commission may determine are appropriate in the public
interest, for the protection of investors, or otherwise in
furtherance of the purposes of this title.
``(4) Rules.--The Commission shall prescribe rules under
this subsection governing business conduct standards for
security-based swap dealers and major security-based swap
participants.
``(i) Documentation and Back Office Standards.--
``(1) In general.--Each registered security-based swap
dealer and major security-based swap participant shall
conform with such standards as may be prescribed by the
Commission, by rule or regulation, that relate to timely and
accurate confirmation, processing, netting, documentation,
and valuation of all security-based swaps.
``(2) Rules.--The Commission shall adopt rules governing
documentation and back office standards for security-based
swap dealers and major security-based swap participants.
``(j) Duties.--Each registered security-based swap dealer
and major security-based swap participant shall, at all
times, comply with the following requirements:
``(1) Monitoring of trading.--The security-based swap
dealer or major security-based swap participant shall monitor
its trading in security-based swaps to prevent violations of
applicable position limits.
``(2) Risk management procedures.--The security-based swap
dealer or major security-based swap participant shall
establish robust and professional risk management systems
adequate for managing the day-to-day business of the
security-based swap dealer or major security-based swap
participant.
``(3) Disclosure of general information.--The security-
based swap dealer or major security-based swap participant
shall disclose to the Commission and to the prudential
regulator for the security-based swap dealer or major
security-based swap participant, as applicable, information
concerning--
``(A) terms and conditions of its security-based swaps;
``(B) security-based swap trading operations, mechanisms,
and practices;
``(C) financial integrity protections relating to security-
based swaps; and
``(D) other information relevant to its trading in
security-based swaps.
``(4) Ability to obtain information.--The security-based
swap dealer or major security-based swap participant shall--
``(A) establish and enforce internal systems and procedures
to obtain any necessary information to perform any of the
functions described in this section; and
``(B) provide the information to the Commission and to the
prudential regulator for the security-based swap dealer or
major security-based swap participant, as applicable, on
request.
``(5) Conflicts of interest.--The security-based swap
dealer and major security-based swap participant shall
implement conflict-of-interest systems and procedures that--
``(A) establish structural and institutional safeguards to
ensure that the activities of any person within the firm
relating to research or analysis of the price or market for
any security-based swap or acting in a role of providing
clearing activities or making determinations as to accepting
clearing customers are separated by appropriate informational
partitions within the firm from the review, pressure, or
oversight of persons whose involvement in pricing, trading,
or clearing activities might potentially bias their judgment
or supervision and contravene the core principles of open
access and the business conduct standards described in this
title; and
``(B) address such other issues as the Commission
determines to be appropriate.
``(6) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this title, the
security-based swap dealer or major security-based swap
participant shall not--
``(A) adopt any process or take any action that results in
any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on trading
or clearing.
``(k) Designation of Chief Compliance Officer.--
``(1) In general.--Each security-based swap dealer and
major security-based swap participant shall designate an
individual to serve as a chief compliance officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior officer
of the security-based swap dealer or major security-based
swap participant;
``(B) review the compliance of the security-based swap
dealer or major security-based swap participant with respect
to the security-based swap dealer and major security-based
swap participant requirements described in this section;
``(C) in consultation with the board of directors, a body
performing a function similar to the board, or the senior
officer of the organization, resolve any conflicts of
interest that may arise;
``(D) be responsible for administering each policy and
procedure that is required to be established pursuant to this
section;
``(E) ensure compliance with this title (including
regulations) relating to security-based swaps, including each
rule prescribed by the Commission under this section;
``(F) establish procedures for the remediation of
noncompliance issues identified by the chief compliance
officer through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(G) establish and follow appropriate procedures for the
handling, management response, remediation, retesting, and
closing of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules prescribed by
the Commission, the chief compliance officer shall annually
prepare and sign a report that contains a description of--
``(i) the compliance of the security-based swap dealer or
major swap participant with respect to this title (including
regulations); and
``(ii) each policy and procedure of the security-based swap
dealer or major security-based swap participant of the chief
compliance officer (including the code of ethics and conflict
of interest policies).
``(B) Requirements.--A compliance report under subparagraph
(A) shall--
``(i) accompany each appropriate financial report of the
security-based swap dealer or major security-based swap
participant that is required to be furnished to the
Commission pursuant to this section; and
``(ii) include a certification that, under penalty of law,
the compliance report is accurate and complete.
``(l) Enforcement and Administrative Proceeding
Authority.--
``(1) Primary enforcement authority.--
``(A) Securities and exchange commission.--Except as
provided in subparagraph

[[Page S2904]]

(B), the Commission shall have primary authority to enforce
subtitle B, and the amendments made by subtitle B of the Wall
Street Transparency and Accountability Act of 2010, with
respect to any person.
``(B) Appropriate federal banking agencies.--The
appropriate Federal banking agency for security-based swap
dealers or major security-based swap participants that are
depository institutions, as that term is defined under
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813), shall have exclusive authority to enforce the
provisions of subsection (e) and other prudential
requirements of this title, with respect to depository
institutions that are security-based swap dealers or major
security-based swap participants.
``(C) Referral.--
``(i) Violations of nonprudential requirements.--If the
appropriate Federal banking agency for security-based swap
dealers or major security-based swap participants that are
depository institutions has cause to believe that such
security-based swap dealer or major security-based swap
participant may have engaged in conduct that constitutes a
violation of the nonprudential requirements of this section
or rules adopted by the Commission thereunder, the agency may
recommend in writing to the Commission that the Commission
initiate an enforcement proceeding as authorized under this
title. The recommendation shall be accompanied by a written
explanation of the concerns giving rise to the
recommendation.
``(ii) Violations of prudential requirements.--If the
Commission has cause to believe that a securities-based swap
dealer or major securities-based swap participant that has a
prudential regulator may have engaged in conduct that
constitute a violation of the prudential requirements of
subsection (e) or rules adopted thereunder, the Commission
may recommend in writing to the prudential regulator that the
prudential regulator initiate an enforcement proceeding as
authorized under this title. The recommendation shall be
accompanied by a written explanation of the concerns giving
rise to the recommendation.
``(2) Censure, denial, suspension; notice and hearing.--The
Commission, by order, shall censure, place limitations on the
activities, functions, or operations of, or revoke the
registration of any security-based swap dealer or major
security-based swap participant that has registered with the
Commission pursuant to subsection (b) if the Commission
finds, on the record after notice and opportunity for
hearing, that such censure, placing of limitations, or
revocation is in the public interest and that such security-
based swap dealer or major security-based swap participant,
or any person associated with such security-based swap dealer
or major security-based swap participant effecting or
involved in effecting transactions in security-based swaps on
behalf of such security-based swap dealer or major security-
based swap participant, whether prior or subsequent to
becoming so associated--
``(A) has committed or omitted any act, or is subject to an
order or finding, enumerated in subparagraph (A), (D), or (E)
of paragraph (4) of section 15(b);
``(B) has been convicted of any offense specified in
subparagraph (B) of such paragraph (4) within 10 years of the
commencement of the proceedings under this subsection;
``(C) is enjoined from any action, conduct, or practice
specified in subparagraph (C) of such paragraph (4);
``(D) is subject to an order or a final order specified in
subparagraph (F) or (H), respectively, of such paragraph (4);
or
``(E) has been found by a foreign financial regulatory
authority to have committed or omitted any act, or violated
any foreign statute or regulation, enumerated in subparagraph
(G) of such paragraph (4).
``(3) Associated persons.--With respect to any person who
is associated, who is seeking to become associated, or, at
the time of the alleged misconduct, who was associated or was
seeking to become associated with a security-based swap
dealer or major security-based swap participant for the
purpose of effecting or being involved in effecting security-
based swaps on behalf of such security-based swap dealer or
major security-based swap participant, the Commission, by
order, shall censure, place limitations on the activities or
functions of such person, or suspend for a period not
exceeding 12 months, or bar such person from being associated
with a security-based swap dealer or major security-based
swap participant, if the Commission finds, on the record
after notice and opportunity for a hearing, that such
censure, placing of limitations, suspension, or bar is in the
public interest and that such person--
``(A) has committed or omitted any act, or is subject to an
order or finding, enumerated in subparagraph (A), (D), or (E)
of paragraph (4) of section 15(b);
``(B) has been convicted of any offense specified in
subparagraph (B) of such paragraph (4) within 10 years of the
commencement of the proceedings under this subsection;
``(C) is enjoined from any action, conduct, or practice
specified in subparagraph (C) of such paragraph (4);
``(D) is subject to an order or a final order specified in
subparagraph (F) or (H), respectively, of such paragraph (4);
or
``(E) has been found by a foreign financial regulatory
authority to have committed or omitted any act, or violated
any foreign statute or regulation, enumerated in subparagraph
(G) of such paragraph (4).
``(4) Unlawful conduct.--It shall be unlawful--
``(A) for any person as to whom an order under paragraph
(3) is in effect, without the consent of the Commission,
willfully to become, or to be, associated with a security-
based swap dealer or major security-based swap participant in
contravention of such order; or
``(B) for any security-based swap dealer or major security-
based swap participant to permit such a person, without the
consent of the Commission, to become or remain a person
associated with the security-based swap dealer or major
security-based swap participant in contravention of such
order, if such security-based swap dealer or major security-
based swap participant knew, or in the exercise of reasonable
care should have known, of such order.''.

SEC. 765. RULEMAKING ON CONFLICT OF INTEREST.

(a) In General.--Not later than 180 days after the date of
enactment of the Wall Street Transparency and Accountability
Act of 2010, the Securities and Exchange Commission shall
determine whether to adopt rules to establish limits on the
control of any clearing agency that clears security-based
swaps, or on the control of any security-based swap execution
facility or national securities exchange that posts or makes
available for trading security-based swaps, by a bank holding
company (as defined in section 2 of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841)) with total consolidated assets
of $50,000,000,000 or more, a nonbank financial company (as
defined in section 102) supervised by the Board of Governors
of the Federal Reserve System, affiliate of such a bank
holding company or nonbank financial company, a security-
based swap dealer, major security-based swap participant, or
person associated with a security-based swap dealer or major
security-based swap participant.
(b) Purposes.--The Commission shall adopt rules if the
Commission determines, after the review described in
subsection (a), that such rules are necessary or appropriate
to improve the governance of, or to mitigate systemic risk,
promote competition, or mitigate conflicts of interest in
connection with a security-based swap dealer or major
security-based swap participant's conduct of business with, a
clearing agency, national securities exchange, or security-
based swap execution facility that clears, posts, or makes
available for trading security-based swaps and in which such
security-based swap dealer or major security-based swap
participant has a material debt or equity investment.

SEC. 766. REPORTING AND RECORDKEEPING.

(a) In General.--The Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) is amended by inserting after section 13
the following:

``SEC. 13A. REPORTING AND RECORDKEEPING FOR CERTAIN SECURITY-
BASED SWAPS.

``(a) Required Reporting of Security-based Swaps Not
Accepted by Any Clearing Agency or Derivatives Clearing
Organization.--
``(1) In general.--Each security-based swap that is not
accepted for clearing by any clearing agency or derivatives
clearing organization shall be reported to--
``(A) a security-based swap data repository described in
section 10B(n); or
``(B) in the case in which there is no security-based swap
data repository that would accept the security-based swap, to
the Commission pursuant to this section within such time
period as the Commission may by rule or regulation prescribe.
``(2) Transition rule for preenactment security-based
swaps.--
``(A) Security-based swaps entered into before the date of
enactment of the wall street transparency and accountability
act of 2010.--Each security-based swap entered into before
the date of enactment of the Wall Street Transparency and
Accountability Act of 2010, the terms of which have not
expired as of the date of enactment of that Act, shall be
reported to a registered security-based swap data repository
or the Commission by a date that is not later than--
``(i) 30 days after issuance of the interim final rule; or
``(ii) such other period as the Commission determines to be
appropriate.
``(B) Commission rulemaking.--The Commission shall
promulgate an interim final rule within 90 days of the date
of enactment of this section providing for the reporting of
each security-based swap entered into before the date of
enactment as referenced in subparagraph (A).
``(C) Effective date.--The reporting provisions described
in this section shall be effective upon the date of the
enactment of this section.
``(3) Reporting obligations.--
``(A) Security-based swaps in which only 1 counterparty is
a security-based swap dealer or major security-based swap
participant.--With respect to a security-based swap in which
only 1 counterparty is a security-based swap dealer or major
security-based swap participant, the security-based swap
dealer or major security-based swap participant shall report
the security-based swap as required under paragraphs (1) and
(2).
``(B) Security-based swaps in which 1 counterparty is a
security-based swap

[[Page S2905]]

dealer and the other a major security-based swap
participant.--With respect to a security-based swap in which
1 counterparty is a security-based swap dealer and the other
a major security-based swap participant, the security-based
swap dealer shall report the security-based swap as required
under paragraphs (1) and (2).
``(C) Other security-based swaps.--With respect to any
other security-based swap not described in subparagraph (A)
or (B), the counterparties to the security-based swap shall
select a counterparty to report the security-based swap as
required under paragraphs (1) and (2).
``(b) Duties of Certain Individuals.--Any individual or
entity that enters into a security-based swap shall meet each
requirement described in subsection (c) if the individual or
entity did not--
``(1) clear the security-based swap in accordance with
section 3C(a)(1); or
``(2) have the data regarding the security-based swap
accepted by a security-based swap data repository in
accordance with rules (including timeframes) adopted by the
Commission under this title.
``(c) Requirements.--An individual or entity described in
subsection (b) shall--
``(1) upon written request from the Commission, provide
reports regarding the security-based swaps held by the
individual or entity to the Commission in such form and in
such manner as the Commission may request; and
``(2) maintain books and records pertaining to the
security-based swaps held by the individual or entity in such
form, in such manner, and for such period as the Commission
may require, which shall be open to inspection by--
``(A) any representative of the Commission;
``(B) an appropriate prudential regulator;
``(C) the Commodity Futures Trading Commission;
``(D) the Financial Stability Oversight Council; and
``(E) the Department of Justice.
``(d) Identical Data.--In prescribing rules under this
section, the Commission shall require individuals and
entities described in subsection (b) to submit to the
Commission a report that contains data that is not less
comprehensive than the data required to be collected by
security-based swap data repositories under this title.''.
(b) Beneficial Ownership Reporting.--Section 13 of the
Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended--
(1) in subsection (d)(1), by inserting ``or otherwise
becomes or is deemed to become a beneficial owner of any of
the foregoing upon the purchase or sale of a security-based
swap that the Commission may define by rule, and'' after
``Alaska Native Claims Settlement Act,''; and
(2) in subsection (g)(1), by inserting ``or otherwise
becomes or is deemed to become a beneficial owner of any
security of a class described in subsection (d)(1) upon the
purchase or sale of a security-based swap that the Commission
may define by rule'' after ``subsection (d)(1) of this
section''.
(c) Reports by Institutional Investment Managers.--Section
13(f)(1) of the Securities Exchange Act of 1934 (15 U.S.C.
78m(f)(1)) is amended by inserting ``or otherwise becomes or
is deemed to become a beneficial owner of any security of a
class described in subsection (d)(1) upon the purchase or
sale of a security-based swap that the Commission may define
by rule,'' after ``subsection (d)(1) of this section''.
(d) Administrative Proceeding Authority.--Section 15(b)(4)
of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)(4))
is amended--
(1) in subparagraph (C), by inserting ``security-based swap
dealer, major security-based swap participant,'' after
``government securities dealer,''; and
(2) in subparagraph (F), by striking ``broker or dealer''
and inserting ``broker, dealer, security-based swap dealer,
or a major security-based swap participant''.
(e) Security-based Swap Beneficial Ownership.--Section 13
of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is
amended by adding at the end the following:
``(o) Beneficial Ownership.--For purposes of this section
and section 16, a person shall be deemed to acquire
beneficial ownership of an equity security based on the
purchase or sale of a security-based swap, only to the extent
that the Commission, by rule, determines after consultation
with the prudential regulators and the Secretary of the
Treasury, that the purchase or sale of the security-based
swap, or class of security-based swap, provides incidents of
ownership comparable to direct ownership of the equity
security, and that it is necessary to achieve the purposes of
this section that the purchase or sale of the security-based
swaps, or class of security-based swap, be deemed the
acquisition of beneficial ownership of the equity
security.''.

SEC. 767. STATE GAMING AND BUCKET SHOP LAWS.

Section 28(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78bb(a)) is amended to read as follows:
``(a) Limitation on Judgments.--
``(1) In general.--No person permitted to maintain a suit
for damages under the provisions of this title shall recover,
through satisfaction of judgment in 1 or more actions, a
total amount in excess of the actual damages to that person
on account of the act complained of. Except as otherwise
specifically provided in this title, nothing in this title
shall affect the jurisdiction of the securities commission
(or any agency or officer performing like functions) of any
State over any security or any person insofar as it does not
conflict with the provisions of this title or the rules and
regulations under this title.
``(2) Rule of construction.--Except as provided in
subsection (f), the rights and remedies provided by this
title shall be in addition to any and all other rights and
remedies that may exist at law or in equity.
``(3) State bucket shop laws.--No State law which prohibits
or regulates the making or promoting of wagering or gaming
contracts, or the operation of `bucket shops' or other
similar or related activities, shall invalidate--
``(A) any put, call, straddle, option, privilege, or other
security subject to this title (except any security that has
a pari-mutuel payout or otherwise is determined by the
Commission, acting by rule, regulation, or order, to be
appropriately subject to such laws), or apply to any activity
which is incidental or related to the offer, purchase, sale,
exercise, settlement, or closeout of any such security;
``(B) any security-based swap between eligible contract
participants; or
``(C) any security-based swap effected on a national
securities exchange registered pursuant to section 6(b).
``(4) Other state provisions.--No provision of State law
regarding the offer, sale, or distribution of securities
shall apply to any transaction in a security-based swap or a
security futures product, except that this paragraph may not
be construed as limiting any State antifraud law of general
applicability. A security-based swap may not be regulated as
an insurance contract under any provision of State law.''.

SEC. 768. AMENDMENTS TO THE SECURITIES ACT OF 1933; TREATMENT
OF SECURITY-BASED SWAPS.

(a) Definitions.--Section 2(a) of the Securities Act of
1933 (15 U.S.C. 77b(a)) is amended--
(1) in paragraph (1), by inserting ``security-based swap,''
after ``security future,'';
(2) in paragraph (3), by adding at the end the following:
``Any offer or sale of a security-based swap by or on behalf
of the issuer of the securities upon which such security-
based swap is based or is referenced, an affiliate of the
issuer, or an underwriter, shall constitute a contract for
sale of, sale of, offer for sale, or offer to sell such
securities.''; and
(3) by adding at the end the following:
``(17) The terms `swap' and `security-based swap' have the
same meanings as in section 1a of the Commodity Exchange Act
(7 U.S.C. 1a).
``(18) The terms `purchase' or `sale' of a security-based
swap shall be deemed to mean the execution, termination
(prior to its scheduled maturity date), assignment, exchange,
or similar transfer or conveyance of, or extinguishing of
rights or obligations under, a security-based swap, as the
context may require.''.
(b) Registration of Security-based Swaps.--Section 5 of the
Securities Act of 1933 (15 U.S.C. 77e) is amended by adding
at the end the following:
``(d) Notwithstanding the provisions of section 3 or 4,
unless a registration statement meeting the requirements of
section 10(a) is in effect as to a security-based swap, it
shall be unlawful for any person, directly or indirectly, to
make use of any means or instruments of transportation or
communication in interstate commerce or of the mails to offer
to sell, offer to buy or purchase or sell a security-based
swap to any person who is not an eligible contract
participant as defined in section 1a(18) of the Commodity
Exchange Act (7 U.S.C. 1a(18)).''.

SEC. 769. DEFINITIONS UNDER THE INVESTMENT COMPANY ACT OF
1940.

Section 2(a) of the Investment Company Act of 1940 (15
U.S.C. 80a-2) is amended by adding at the end the following:
``(54) The terms `commodity pool', `commodity pool
operator', `commodity trading advisor', `major swap
participant', `swap', `swap dealer', and `swap execution
facility' have the same meanings as in section 1a of the
Commodity Exchange Act (7 U.S.C. 1a).''.

SEC. 770. DEFINITIONS UNDER THE INVESTMENT ADVISORS ACT OF
1940.

Section 202(a) of the Investment Advisers Act of 1940 (15
U.S.C. 80b-2) is amended by adding at the end the following:
``(29) The terms `commodity pool', `commodity pool
operator', `commodity trading advisor', `major swap
participant', `swap', `swap dealer', and `swap execution
facility' have the same meanings as in section 1a of the
Commodity Exchange Act (7 U.S.C. 1a).''.

SEC. 771. OTHER AUTHORITY.

Unless otherwise provided by its terms, this subtitle does
not divest any appropriate Federal banking agency, the
Securities and Exchange Commission, the Commodity Futures
Trading Commission, or any other Federal or State agency, of
any authority derived from any other provision of applicable
law.

SEC. 772. JURISDICTION.

(a) In General.--Section 36 of the Securities Exchange Act
of 1934 (15 U.S.C. 78mm) is amended by adding at the end the
following:
``(c) Derivatives.--The Commission shall not grant
exemptions from the security-based swap provisions of the
Wall Street Transparency and Accountability Act of 2010 or
the amendments made by that Act, except

[[Page S2906]]

as expressly authorized under the provisions of that Act.''.
(b) Rule of Construction.--Section 30 of the Securities
Exchange Act of 1934 (15 U.S.C. 78dd) is amended by adding at
the end the following:
``(c) Rule of Construction.--No provision of this title
that was added by the Wall Street Transparency and
Accountability Act of 2010, or any rule or regulation
thereunder, shall apply to any person insofar as such person
transacts a business in security-based swaps without the
jurisdiction of the United States, unless such person
transacts such business in contravention of such rules and
regulations as the Commission may prescribe as necessary or
appropriate to prevent the evasion of any provision of this
title that was added by the Wall Street Transparency and
Accountability Act of 2010. This subsection shall not be
construed to limit the jurisdiction of the Commission under
any provision of this title, as in effect prior to the date
of enactment of the Wall Street Transparency and
Accountability Act of 2010.''.

SEC. 773. EFFECTIVE DATE.

Unless otherwise specifically provided in this subtitle,
this subtitle, the provisions of this subtitle, and the
amendments made by this subtitle shall become effective 180
days after the date of enactment of this Act.

TITLE VIII--PAYMENT, CLEARING, AND SETTLEMENT SUPERVISION

SEC. 801. SHORT TITLE.

This title may be cited as the ``Payment, Clearing, and
Settlement Supervision Act of 2010''.

SEC. 802. FINDINGS AND PURPOSES.

(a) Findings.--Congress finds the following:
(1) The proper functioning of the financial markets is
dependent upon safe and efficient arrangements for the
clearing and settlement of payment, securities, and other
financial transactions.
(2) Financial market utilities that conduct or support
multilateral payment, clearing, or settlement activities may
reduce risks for their participants and the broader financial
system, but such utilities may also concentrate and create
new risks and thus must be well designed and operated in a
safe and sound manner.
(3) Payment, clearing, and settlement activities conducted
by financial institutions also present important risks to the
participating financial institutions and to the financial
system.
(4) Enhancements to the regulation and supervision of
systemically important financial market utilities and the
conduct of systemically important payment, clearing, and
settlement activities by financial institutions are
necessary--
(A) to provide consistency;
(B) to promote robust risk management and safety and
soundness;
(C) to reduce systemic risks; and
(D) to support the stability of the broader financial
system.
(b) Purpose.--The purpose of this title is to mitigate
systemic risk in the financial system and promote financial
stability by--
(1) authorizing the Board of Governors to prescribe uniform
standards for the--
(A) management of risks by systemically important financial
market utilities; and
(B) conduct of systemically important payment, clearing,
and settlement activities by financial institutions;
(2) providing the Board of Governors an enhanced role in
the supervision of risk management standards for systemically
important financial market utilities;
(3) strengthening the liquidity of systemically important
financial market utilities; and
(4) providing the Board of Governors an enhanced role in
the supervision of risk management standards for systemically
important payment, clearing, and settlement activities by
financial institutions.

SEC. 803. DEFINITIONS.

In this title, the following definitions shall apply:
(1) Appropriate financial regulator.--The term
``appropriate financial regulator'' means--
(A) the primary financial regulatory agency, as defined in
section 2 of this Act;
(B) the National Credit Union Administration, with respect
to any insured credit union under the Federal Credit Union
Act (12 U.S.C. 1751 et seq.); and
(C) the Board of Governors, with respect to organizations
operating under section 25A of the Federal Reserve Act (12
U.S.C. 611), and any other financial institution engaged in a
designated activity.
(2) Designated activity.--The term ``designated activity''
means a payment, clearing, or settlement activity that the
Council has designated as systemically important under
section 804.
(3) Designated financial market utility.--The term
``designated financial market utility'' means a financial
market utility that the Council has designated as
systemically important under section 804.
(4) Financial institution.--The term ``financial
institution'' means--
(A) a depository institution, as defined in section 3 of
the Federal Deposit Insurance Act (12 U.S.C. 1813);
(B) a branch or agency of a foreign bank, as defined in
section 1(b) of the International Banking Act of 1978 (12
U.S.C. 3101);
(C) an organization operating under section 25 or 25A of
the Federal Reserve Act (12 U.S.C. 601-604a and 611 through
631);
(D) a credit union, as defined in section 101 of the
Federal Credit Union Act (12 U.S.C. 1752);
(E) a broker or dealer, as defined in section 3 of the
Securities Exchange Act of 1934 (15 U.S.C. 78c);
(F) an investment company, as defined in section 3 of the
Investment Company Act of 1940 (15 U.S.C. 80a-3);
(G) an insurance company, as defined in section 2 of the
Investment Company Act of 1940 (15 U.S.C. 80a-2);
(H) an investment adviser, as defined in section 202 of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-2);
(I) a futures commission merchant, commodity trading
advisor, or commodity pool operator, as defined in section 1a
of the Commodity Exchange Act (7 U.S.C. 1a); and
(J) any company engaged in activities that are financial in
nature or incidental to a financial activity, as described in
section 4 of the Bank Holding Company Act of 1956 (12 U.S.C.
1843(k)).
(5) Financial market utility.--The term ``financial market
utility'' means any person that manages or operates a
multilateral system for the purpose of transferring,
clearing, or settling payments, securities, or other
financial transactions among financial institutions or
between financial institutions and the person.
(6) Payment, clearing, or settlement activity.--
(A) In general.--The term ``payment, clearing, or
settlement activity'' means an activity carried out by 1 or
more financial institutions to facilitate the completion of
financial transactions.
(B) Financial transaction.--For the purposes of
subparagraph (A), the term ``financial transaction''
includes--
(i) funds transfers;
(ii) securities contracts;
(iii) contracts of sale of a commodity for future delivery;
(iv) forward contracts;
(v) repurchase agreements;
(vi) swaps;
(vii) security-based swaps;
(viii) swap agreements;
(ix) security-based swap agreements;
(x) foreign exchange contracts;
(xi) financial derivatives contracts; and
(xii) any similar transaction that the Council determines
to be a financial transaction for purposes of this title.
(C) Included activities.--When conducted with respect to a
financial transaction, payment, clearing, and settlement
activities may include--
(i) the calculation and communication of unsettled
financial transactions between counterparties;
(ii) the netting of transactions;
(iii) provision and maintenance of trade, contract, or
instrument information;
(iv) the management of risks and activities associated with
continuing financial transactions;
(v) transmittal and storage of payment instructions;
(vi) the movement of funds;
(vii) the final settlement of financial transactions; and
(viii) other similar functions that the Council may
determine.
(7) Supervisory agency.--
(A) In general.--The term ``Supervisory Agency'' means the
Federal agency that has primary jurisdiction over a
designated financial market utility under Federal banking,
securities, or commodity futures laws, as follows:
(i) The Securities and Exchange Commission, with respect to
a designated financial market utility that is a clearing
agency registered with the Securities and Exchange
Commission.
(ii) The Commodity Futures Trading Commission, with respect
to a designated financial market utility that is a
derivatives clearing organization registered with the
Commodity Futures Trading Commission.
(iii) The appropriate Federal banking agency, with respect
to a designated financial market utility that is an
institution described in section 3(q) of the Federal Deposit
Insurance Act.
(iv) The Board of Governors, with respect to a designated
financial market utility that is otherwise not subject to the
jurisdiction of any agency listed in clauses (i), (ii), and
(iii).
(B) Multiple agency jurisdiction.--If a designated
financial market utility is subject to the jurisdictional
supervision of more than 1 agency listed in subparagraph (A),
then such agencies should agree on 1 agency to act as the
Supervisory Agency, and if such agencies cannot agree on
which agency has primary jurisdiction, the Council shall
decide which agency is the Supervisory Agency for purposes of
this title.
(8) Systemically important and systemic importance.--The
terms ``systemically important'' and ``systemic importance''
mean a situation where the failure of or a disruption to the
functioning of a financial market utility or the conduct of a
payment, clearing, or settlement activity could create, or
increase, the risk of significant liquidity or credit
problems spreading among financial institutions or markets
and thereby threaten the stability of the financial system.

SEC. 804. DESIGNATION OF SYSTEMIC IMPORTANCE.

(a) Designation.--
(1) Financial stability oversight council.--The Council, on
a nondelegable basis and by a vote of not fewer than \2/3\ of
members then serving, including an affirmative vote by the
Chairperson of the Council, shall

[[Page S2907]]

designate those financial market utilities or payment,
clearing, or settlement activities that the Council
determines are, or are likely to become, systemically
important.
(2) Considerations.--In determining whether a financial
market utility or payment, clearing, or settlement activity
is, or is likely to become, systemically important, the
Council shall take into consideration the following:
(A) The aggregate monetary value of transactions processed
by the financial market utility or carried out through the
payment, clearing, or settlement activity.
(B) The aggregate exposure of the financial market utility
or a financial institution engaged in payment, clearing, or
settlement activities to its counterparties.
(C) The relationship, interdependencies, or other
interactions of the financial market utility or payment,
clearing, or settlement activity with other financial market
utilities or payment, clearing, or settlement activities.
(D) The effect that the failure of or a disruption to the
financial market utility or payment, clearing, or settlement
activity would have on critical markets, financial
institutions, or the broader financial system.
(E) Any other factors that the Council deems appropriate.
(b) Rescission of Designation.--
(1) In general.--The Council, on a nondelegable basis and
by a vote of not fewer than \2/3\ of members then serving,
including an affirmative vote by the Chairperson of the
Council, shall rescind a designation of systemic importance
for a designated financial market utility or designated
activity if the Council determines that the utility or
activity no longer meets the standards for systemic
importance.
(2) Effect of rescission.--Upon rescission, the financial
market utility or financial institutions conducting the
activity will no longer be subject to the provisions of this
title or any rules or orders prescribed by the Council under
this title.
(c) Consultation and Notice and Opportunity for Hearing.--
(1) Consultation.--Before making any determination under
subsection (a) or (b), the Council shall consult with the
relevant Supervisory Agency and the Board of Governors.
(2) Advance notice and opportunity for hearing.--
(A) In general.--Before making any determination under
subsection (a) or (b), the Council shall provide the
financial market utility or, in the case of a payment,
clearing, or settlement activity, financial institutions with
advance notice of the proposed determination of the Council.
(B) Notice in federal register.--The Council shall provide
such advance notice to financial institutions by publishing a
notice in the Federal Register.
(C) Requests for hearing.--Within 30 days from the date of
any notice of the proposed determination of the Council, the
financial market utility or, in the case of a payment,
clearing, or settlement activity, a financial institution
engaged in the designated activity may request, in writing,
an opportunity for a written or oral hearing before the
Council to demonstrate that the proposed designation or
rescission of designation is not supported by substantial
evidence.
(D) Written submissions.--Upon receipt of a timely request,
the Council shall fix a time, not more than 30 days after
receipt of the request, unless extended at the request of the
financial market utility or financial institution, and place
at which the financial market utility or financial
institution may appear, personally or through counsel, to
submit written materials, or, at the sole discretion of the
Council, oral testimony or oral argument.
(3) Emergency exception.--
(A) Waiver or modification by vote of the council.--The
Council may waive or modify the requirements of paragraph (2)
if the Council determines, by an affirmative vote of not less
than \2/3\ of all members then serving, including an
affirmative vote by the Chairperson of the Council, that the
waiver or modification is necessary to prevent or mitigate an
immediate threat to the financial system posed by the
financial market utility or the payment, clearing, or
settlement activity.
(B) Notice of waiver or modification.--The Council shall
provide notice of the waiver or modification to the financial
market utility concerned or, in the case of a payment,
clearing, or settlement activity, to financial institutions,
as soon as practicable, which shall be no later than 24 hours
after the waiver or modification in the case of a financial
market utility and 3 business days in the case of financial
institutions. The Council shall provide the notice to
financial institutions by posting a notice on the website of
the Council and by publishing a notice in the Federal
Register.
(d) Notification of Final Determination.--
(1) After hearing.--Within 60 days of any hearing under
subsection (c)(3), the Council shall notify the financial
market utility or financial institutions of the final
determination of the Council in writing, which shall include
findings of fact upon which the determination of the Council
is based.
(2) When no hearing requested.--If the Council does not
receive a timely request for a hearing under subsection
(c)(3), the Council shall notify the financial market utility
or financial institutions of the final determination of the
Council in writing not later than 30 days after the
expiration of the date by which a financial market utility or
a financial institution could have requested a hearing. All
notices to financial institutions under this subsection shall
be published in the Federal Register.
(e) Extension of Time Periods.--The Council may extend the
time periods established in subsections (c) and (d) as the
Council determines to be necessary or appropriate.

SEC. 805. STANDARDS FOR SYSTEMICALLY IMPORTANT FINANCIAL
MARKET UTILITIES AND PAYMENT, CLEARING, OR
SETTLEMENT ACTIVITIES.

(a) Authority To Prescribe Standards.--The Board, by rule
or order, and in consultation with the Council and the
Supervisory Agencies, shall prescribe risk management
standards, taking into consideration relevant international
standards and existing prudential requirements, governing--
(1) the operations related to the payment, clearing, and
settlement activities of designated financial market
utilities; and
(2) the conduct of designated activities by financial
institutions.
(b) Objectives and Principles.--The objectives and
principles for the risk management standards prescribed under
subsection (a) shall be to--
(1) promote robust risk management;
(2) promote safety and soundness;
(3) reduce systemic risks; and
(4) support the stability of the broader financial system.
(c) Scope.--The standards prescribed under subsection (a)
may address areas such as--
(1) risk management policies and procedures;
(2) margin and collateral requirements;
(3) participant or counterparty default policies and
procedures;
(4) the ability to complete timely clearing and settlement
of financial transactions;
(5) capital and financial resource requirements for
designated financial market utilities; and
(6) other areas that the Board determines are necessary to
achieve the objectives and principles in subsection (b).
(d) Threshold Level.--The standards prescribed under
subsection (a) governing the conduct of designated activities
by financial institutions shall, where appropriate, establish
a threshold as to the level or significance of engagement in
the activity at which a financial institution will become
subject to the standards with respect to that activity.
(e) Compliance Required.--Designated financial market
utilities and financial institutions subject to the standards
prescribed by the Board of Governors for a designated
activity shall conduct their operations in compliance with
the applicable risk management standards prescribed by the
Board of Governors.

SEC. 806. OPERATIONS OF DESIGNATED FINANCIAL MARKET
UTILITIES.

(a) Federal Reserve Account and Services.--The Board of
Governors may authorize a Federal Reserve Bank to establish
and maintain an account for a designated financial market
utility and provide services to the designated financial
market utility that the Federal Reserve Bank is authorized
under the Federal Reserve Act to provide to a depository
institution, subject to any applicable rules, orders,
standards, or guidelines prescribed by the Board of
Governors.
(b) Advances.--The Board of Governors may authorize a
Federal Reserve Bank to provide to a designated financial
market utility the same discount and borrowing privileges as
the Federal Reserve Bank may provide to a depository
institution under the Federal Reserve Act, subject to any
applicable rules, orders, standards, or guidelines prescribed
by the Board of Governors.
(c) Earnings on Federal Reserve Balances.--A Federal
Reserve Bank may pay earnings on balances maintained by or on
behalf of a designated financial market utility in the same
manner and to the same extent as the Federal Reserve Bank may
pay earnings to a depository institution under the Federal
Reserve Act, subject to any applicable rules, orders,
standards, or guidelines prescribed by the Board of
Governors.
(d) Reserve Requirements.--The Board of Governors may
exempt a designated financial market utility from, or modify
any, reserve requirements under section 19 of the Federal
Reserve Act (12 U.S.C. 461) applicable to a designated
financial market utility.
(e) Changes to Rules, Procedures, or Operations.--
(1) Advance notice.--
(A) Advance notice of proposed changes required.--A
designated financial market utility shall provide notice 60
days in advance advance notice to its Supervisory Agency and
the Board of Governors of any proposed change to its rules,
procedures, or operations that could, as defined in rules of
the Board of Governors, materially affect, the nature or
level of risks presented by the designated financial market
utility.
(B) Terms and standards prescribed by the board of
governors.--The Board of Governors shall prescribe
regulations that define and describe the standards for
determining when notice is required to be provided under
subparagraph (A).
(C) Contents of notice.--The notice of a proposed change
shall describe--
(i) the nature of the change and expected effects on risks
to the designated financial market utility, its participants,
or the market; and
(ii) how the designated financial market utility plans to
manage any identified risks.
(D) Additional information.--The Supervisory Agency or the
Board of Governors

[[Page S2908]]

may require a designated financial market utility to provide
any information necessary to assess the effect the proposed
change would have on the nature or level of risks associated
with the designated financial market utility's payment,
clearing, or settlement activities and the sufficiency of any
proposed risk management techniques.
(E) Notice of objection.--The Supervisory Agency or the
Board of Governors shall notify the designated financial
market utility of any objection regarding the proposed change
within 60 days from the later of--
(i) the date that the notice of the proposed change is
received; or
(ii) the date any further information requested for
consideration of the notice is received.
(F) Change not allowed if objection.--A designated
financial market utility shall not implement a change to
which the Board of Governors or the Supervisory Agency has an
objection.
(G) Change allowed if no objection within 60 days.--A
designated financial market utility may implement a change if
it has not received an objection to the proposed change
within 60 days of the later of--
(i) the date that the Supervisory Agency or the Board of
Governors receives the notice of proposed change; or
(ii) the date the Supervisory Agency or the Board of
Governors receives any further information it requests for
consideration of the notice.
(H) Review extension for novel or complex issues.--The
Supervisory Agency or the Board of Governors may, during the
60-day review period, extend the review period for an
additional 60 days for proposed changes that raise novel or
complex issues, subject to the Supervisory Agency or the
Board of Governors providing the designated financial market
utility with prompt written notice of the extension. Any
extension under this subparagraph will extend the time
periods under subparagraphs (D) and (F).
(I) Change allowed earlier if notified of no objection.--A
designated financial market utility may implement a change in
less than 60 days from the date of receipt of the notice of
proposed change by the Supervisory Agency or the Board of
Governors, or the date the Supervisory Agency or the Board of
Governors receives any further information it requested, if
the Supervisory Agency or the Board of Governors notifies the
designated financial market utility in writing that it does
not object to the proposed change and authorizes the
designated financial market utility to implement the change
on an earlier date, subject to any conditions imposed by the
Supervisory Agency or the Board of Governors.
(2) Emergency changes.--
(A) In general.--A designated financial market utility may
implement a change that would otherwise require advance
notice under this subsection if it determines that--
(i) an emergency exists; and
(ii) immediate implementation of the change is necessary
for the designated financial market utility to continue to
provide its services in a safe and sound manner.
(B) Notice required within 24 hours.--The designated
financial market utility shall provide notice of any such
emergency change to its Supervisory Agency and the Board of
Governors, as soon as practicable, which shall be no later
than 24 hours after implementation of the change.
(C) Contents of emergency notice.--In addition to the
information required for changes requiring advance notice,
the notice of an emergency change shall describe--
(i) the nature of the emergency; and
(ii) the reason the change was necessary for the designated
financial market utility to continue to provide its services
in a safe and sound manner.
(D) Modification or rescission of change may be required.--
The Supervisory Agency or the Board of Governors may require
modification or rescission of the change if it finds that the
change is not consistent with the purposes of this Act or any
rules, orders, or standards prescribed by the Board of
Governors hereunder.
(3) Copying the board of governors.--The Supervisory Agency
shall provide the Board of Governors concurrently with a
complete copy of any notice, request, or other information it
issues, submits, or receives under this subsection.
(4) Consultation with board of governors.--Before taking
any action on, or completing its review of, a change proposed
by a designated financial market utility, the Supervisory
Agency shall consult with the Board of Governors.

SEC. 807. EXAMINATION OF AND ENFORCEMENT ACTIONS AGAINST
DESIGNATED FINANCIAL MARKET UTILITIES.

(a) Examination.--Notwithstanding any other provision of
law and subject to subsection (d), the Supervisory Agency
shall conduct examinations of a designated financial market
utility at least once annually in order to determine the
following:
(1) The nature of the operations of, and the risks borne
by, the designated financial market utility.
(2) The financial and operational risks presented by the
designated financial market utility to financial
institutions, critical markets, or the broader financial
system.
(3) The resources and capabilities of the designated
financial market utility to monitor and control such risks.
(4) The safety and soundness of the designated financial
market utility.
(5) The designated financial market utility's compliance
with--
(A) this title; and
(B) the rules and orders prescribed by the Board of
Governors under this title.
(b) Service Providers.--Whenever a service integral to the
operation of a designated financial market utility is
performed for the designated financial market utility by
another entity, whether an affiliate or non-affiliate and
whether on or off the premises of the designated financial
market utility, the Supervisory Agency may examine whether
the provision of that service is in compliance with
applicable law, rules, orders, and standards to the same
extent as if the designated financial market utility were
performing the service on its own premises.
(c) Enforcement.--For purposes of enforcing the provisions
of this section, a designated financial market utility shall
be subject to, and the appropriate Supervisory Agency shall
have authority under 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 designated financial market utility was an insured
depository institution and the Supervisory Agency was the
appropriate Federal banking agency for such insured
depository institution.
(d) Board of Governors Involvement in Examinations.--
(1) Board of governors consultation on examination
planning.--The Supervisory Agency shall consult with the
Board of Governors regarding the scope and methodology of any
examination conducted under subsections (a) and (b).
(2) Board of governors participation in examination.--The
Board of Governors may, in its discretion, participate in any
examination led by a Supervisory Agency and conducted under
subsections (a) and (b).
(e) Board of Governors Enforcement Recommendations.--
(1) Recommendation.--The Board of Governors may at any time
recommend to the Supervisory Agency that such agency take
enforcement action against a designated financial market
utility. Any such recommendation for enforcement action shall
provide a detailed analysis supporting the recommendation of
the Board of Governors.
(2) Consideration.--The Supervisory Agency shall consider
the recommendation of the Board of Governors and submit a
response to the Board of Governors within 60 days.
(3) Mediation.--If the Supervisory Agency rejects, in whole
or in part, the recommendation of the Board of Governors, the
Board of Governors may dispute the matter by referring the
recommendation to the Council, which shall attempt to resolve
the dispute.
(4) Enforcement action.--If the Council is unable to
resolve the dispute under paragraph (3) within 30 days from
the date of referral, the Board of Governors may, upon a vote
of its members--
(A) exercise the enforcement authority referenced in
subsection (c) as if it were the Supervisory Agency; and
(B) take enforcement action against the designated
financial market utility.
(f) Emergency Enforcement Actions by the Board of
Governors.--
(1) Imminent risk of substantial harm.--The Board of
Governors may, after consulting with the Council and the
Supervisory Agency, take enforcement action against a
designated financial market utility if the Board of Governors
has reasonable cause to believe that--
(A) either--
(i) an action engaged in, or contemplated by, a designated
financial market utility (including any change proposed by
the designated financial market utility to its rules,
procedures, or operations that would otherwise be subject to
section 806(e)) poses an imminent risk of substantial harm to
financial institutions, critical markets, or the broader
financial system; or
(ii) the condition of a designated financial market utility
poses an imminent risk of substantial harm to financial
institutions, critical markets, or the broader financial
system; and
(B) the imminent risk of substantial harm precludes the
Board of Governors' use of the procedures in subsection (e).
(2) Enforcement authority.--For purposes of taking
enforcement action under paragraph (1), a designated
financial market utility shall be subject to, and the Board
of Governors shall have authority under 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 designated financial market
utility was an insured depository institution and the Board
of Governors was the appropriate Federal banking agency for
such insured depository institution.
(3) Prompt notice to supervisory agency of enforcement
action.--Within 24 hours of taking an enforcement action
under this subsection, the Board of Governors shall provide
written notice to the designated financial market utility's
Supervisory Agency containing a detailed analysis of the
action of the Board of Governors, with supporting
documentation included.

SEC. 808. EXAMINATION OF AND ENFORCEMENT ACTIONS AGAINST
FINANCIAL INSTITUTIONS SUBJECT TO STANDARDS FOR
DESIGNATED ACTIVITIES.

(a) Examination.--The appropriate financial regulator is
authorized to examine a financial institution subject to the
standards prescribed by the Board of Governors for a
designated activity in order to determine the following:

[[Page S2909]]

(1) The nature and scope of the designated activities
engaged in by the financial institution.
(2) The financial and operational risks the designated
activities engaged in by the financial institution may pose
to the safety and soundness of the financial institution.
(3) The financial and operational risks the designated
activities engaged in by the financial institution may pose
to other financial institutions, critical markets, or the
broader financial system.
(4) The resources available to and the capabilities of the
financial institution to monitor and control the risks
described in paragraphs (2) and (3).
(5) The financial institution's compliance with this title
and the rules and orders prescribed by the Board of Governors
under this title.
(b) Enforcement.--For purposes of enforcing the provisions
of this section, and the rules and orders prescribed by the
Board of Governors under this section, a financial
institution subject to the standards prescribed by the Board
of Governors for a designated activity shall be subject to,
and the appropriate financial regulator shall have authority
under 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
financial institution was an insured depository institution
and the appropriate financial regulator was the appropriate
Federal banking agency for such insured depository
institution.
(c) Technical Assistance.--The Board of Governors shall
consult with and provide such technical assistance as may be
required by the appropriate financial regulators to ensure
that the rules and orders prescribed by the Board of
Governors under this title are interpreted and applied in as
consistent and uniform a manner as practicable.
(d) Delegation.--
(1) Examination.--
(A) Request to board of governors.--The appropriate
financial regulator may request the Board of Governors to
conduct or participate in an examination of a financial
institution subject to the standards prescribed by the Board
of Governors for a designated activity in order to assess the
compliance of such financial institution with--
(i) this title; or
(ii) the rules or orders prescribed by the Board of
Governors under this title.
(B) Examination by board of governors.--Upon receipt of an
appropriate written request, the Board of Governors will
conduct the examination under such terms and conditions to
which the Board of Governors and the appropriate financial
regulator mutually agree.
(2) Enforcement.--
(A) Request to board of governors.--The appropriate
financial regulator may request the Board of Governors to
enforce this title or the rules or orders prescribed by the
Board of Governors under this title against a financial
institution that is subject to the standards prescribed by
the Board of Governors for a designated activity.
(B) Enforcement by board of governors.--Upon receipt of an
appropriate written request, the Board of Governors shall
determine whether an enforcement action is warranted, and, if
so, it shall enforce compliance with this title or the rules
or orders prescribed by the Board of Governors under this
title and, if so, the financial institution shall be subject
to, and the Board of Governors shall have authority under 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 financial institution
was an insured depository institution and the Board of
Governors was the appropriate Federal banking agency for such
insured depository institution.
(e) Back-up Authority of the Board of Governors.--
(1) Examination and enforcement.--Notwithstanding any other
provision of law, the Board of Governors may--
(A) conduct an examination of the type described in
subsection (a) of any financial institution that is subject
to the standards prescribed by the Board of Governors for a
designated activity; and
(B) enforce the provisions of this title or any rules or
orders prescribed by the Board of Governors under this title
against any financial institution that is subject to the
standards prescribed by the Board of Governors for a
designated activity.
(2) Limitations.--
(A) Examination.--The Board of Governors may exercise the
authority described in paragraph (1)(A) only if the Board of
Governors has--
(i) reasonable cause to believe that a financial
institution is not in compliance with this title or the rules
or orders prescribed by the Board of Governors under this
title with respect to a designated activity;
(ii) notified, in writing, the appropriate financial
regulator and the Council of its belief under clause (i) with
supporting documentation included;
(iii) requested the appropriate financial regulator to
conduct a prompt examination of the financial institution;
and
(iv) either--

(I) not been afforded a reasonable opportunity to
participate in an examination of the financial institution by
the appropriate financial regulator within 30 days after the
date of the Board's notification under clause (ii); or
(II) reasonable cause to believe that the financial
institution's noncompliance with this title or the rules or
orders prescribed by the Board of Governors under this title
poses a substantial risk to other financial institutions,
critical markets, or the broader financial system, subject to
the Board of Governors affording the appropriate financial
regulator a reasonable opportunity to participate in the
examination.

(B) Enforcement.--The Board of Governors may exercise the
authority described in paragraph (1)(B) only if the Board of
Governors has--
(i) reasonable cause to believe that a financial
institution is not in compliance with this title or the rules
or orders prescribed by the Board of Governors under this
title with respect to a designated activity;
(ii) notified, in writing, the appropriate financial
regulator and the Council of its belief under clause (i) with
supporting documentation included and with a recommendation
that the appropriate financial regulator take 1 or more
specific enforcement actions against the financial
institution; and
(iii) either--

(I) not been notified, in writing, by the appropriate
financial regulator of the commencement of an enforcement
action recommended by the Board of Governors against the
financial institution within 60 days from the date of the
notification under clause (ii); or
(II) reasonable cause to believe that the financial
institution's noncompliance with this title or the rules or
orders prescribed by the Board of Governors under this title
poses a substantial risk to other financial institutions,
critical markets, or the broader financial system, subject to
the Board of Governors notifying the appropriate financial
regulator of the Board's enforcement action.

(3) Enforcement provisions.--For purposes of taking
enforcement action under paragraph (1), the financial
institution shall be subject to, and the Board of Governors
shall have authority under 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 financial institution was an insured depository
institution and the Board of Governors was the appropriate
Federal banking agency for such insured depository
institution.

SEC. 809. REQUESTS FOR INFORMATION, REPORTS, OR RECORDS.

(a) Information to Assess Systemic Importance.--
(1) Financial market utilities.--The Council is authorized
to require any financial market utility to submit such
information as the Council may require for the sole purpose
of assessing whether that financial market utility is
systemically important, but only if the Council has
reasonable cause to believe that the financial market utility
meets the standards for systemic importance set forth in
section 804.
(2) Financial institutions engaged in payment, clearing, or
settlement activities.--The Council is authorized to require
any financial institution to submit such information as the
Council may require for the sole purpose of assessing whether
any payment, clearing, or settlement activity engaged in or
supported by a financial institution is systemically
important, but only if the Council has reasonable cause to
believe that the activity meets the standards for systemic
importance set forth in section 804.
(b) Reporting After Designation.--
(1) Designated financial market utilities.--The Board of
Governors and the Council may require a designated financial
market utility to submit reports or data to the Board of
Governors and the Council in such frequency and form as
deemed necessary by the Board of Governors and the Council in
order to assess the safety and soundness of the utility and
the systemic risk that the utility's operations pose to the
financial system.
(2) Financial institutions subject to standards for
designated activities.--The Board of Governors and the
Council may require 1 or more financial institutions subject
to the standards prescribed by the Board of Governors for a
designated activity to submit, in such frequency and form as
deemed necessary by the Board of Governors and the Council,
reports and data to the Board of Governors and the Council
solely with respect to the conduct of the designated activity
and solely to assess whether--
(A) the rules, orders, or standards prescribed by the Board
of Governors with respect to the designated activity
appropriately address the risks to the financial system
presented by such activity; and
(B) the financial institutions are in compliance with this
title and the rules and orders prescribed by the Board of
Governors under this title with respect to the designated
activity.
(c) Coordination With Appropriate Federal Supervisory
Agency.--
(1) Advance coordination.--Before directly requesting any
material information from, or imposing reporting or
recordkeeping requirements on, any financial market utility
or any financial institution engaged in a payment, clearing,
or settlement activity, the Board of Governors and the
Council shall coordinate with the Supervisory Agency for a
financial market utility or the appropriate financial
regulator for a financial institution to determine if the
information is available from or may be obtained by the
agency in the form, format, or

[[Page S2910]]

detail required by the Board of Governors and the Council.
(2) Supervisory reports.--Notwithstanding any other
provision of law, the Supervisory Agency, the appropriate
financial regulator, and the Board of Governors are
authorized to disclose to each other and the Council copies
of its examination reports or similar reports regarding any
financial market utility or any financial institution engaged
in payment, clearing, or settlement activities.
(d) Timing of Response From Appropriate Federal Supervisory
Agency.--If the information, report, records, or data
requested by the Board of Governors or the Council under
subsection (c)(1) are not provided in full by the Supervisory
Agency or the appropriate financial regulator in less than 15
days after the date on which the material is requested, the
Board of Governors or the Council may request the information
or impose recordkeeping or reporting requirements directly on
such persons as provided in subsections (a) and (b) with
notice to the agency.
(e) Sharing of Information.--
(1) Material concerns.--Notwithstanding any other provision
of law, the Board of Governors, the Council, the appropriate
financial regulator, and any Supervisory Agency are
authorized to--
(A) promptly notify each other of material concerns about a
designated financial market utility or any financial
institution engaged in designated activities; and
(B) share appropriate reports, information, or data
relating to such concerns.
(2) Other information.--Notwithstanding any other provision
of law, the Board of Governors, the Council, the appropriate
financial regulator, or any Supervisory Agency may, under
such terms and conditions as it deems appropriate, provide
confidential supervisory information and other information
obtained under this title to other persons it deems
appropriate, including the Secretary, State financial
institution supervisory agencies, foreign financial
supervisors, foreign central banks, and foreign finance
ministries, subject to reasonable assurances of
confidentiality.
(f) Privilege Maintained.--The Board of Governors, the
Council, the appropriate financial regulator, and any
Supervisory Agency providing reports or data under this
section shall not be deemed to have waived any privilege
applicable to those reports or data, or any portion thereof,
by providing the reports or data to the other party or by
permitting the reports or data, or any copies thereof, to be
used by the other party.
(g) Disclosure Exemption.--Information obtained by the
Board of Governors or the Council under this section and any
materials prepared by the Board of Governors or the Council
regarding its assessment of the systemic importance of
financial market utilities or any payment, clearing, or
settlement activities engaged in by financial institutions,
and in connection with its supervision of designated
financial market utilities and designated activities, shall
be confidential supervisory information exempt from
disclosure under section 552 of title 5, United States Code.
For purposes of such section 552, this subsection shall be
considered a statute described in subsection (b)(3) of such
section 552.

SEC. 810. RULEMAKING.

The Board of Governors and the Council are authorized to
prescribe such rules and issue such orders as may be
necessary to administer and carry out the authorities and
duties granted to the Board of Governors or the Council,
respectively, and prevent evasions thereof.

SEC. 811. OTHER AUTHORITY.

Unless otherwise provided by its terms, this title does not
divest any appropriate financial regulator, any Supervisory
Agency, or any other Federal or State agency, of any
authority derived from any other applicable law, except that
any standards prescribed by the Board of Governors under
section 805 shall supersede any less stringent requirements
established under other authority to the extent of any
conflict.

SEC. 812. EFFECTIVE DATE.

This title is effective as of the date of enactment of this
Act.

TITLE IX--INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE REGULATION OF
SECURITIES

Subtitle A--Increasing Investor Protection

SEC. 911. INVESTOR ADVISORY COMMITTEE ESTABLISHED.

Title I of the Securities Exchange Act of 1934 (15 U.S.C.
78a et seq.) is amended by adding at the end the following:

``SEC. 39. INVESTOR ADVISORY COMMITTEE.

``(a) Establishment and Purpose.--
``(1) Establishment.--There is established within the
Commission the Investor Advisory Committee (referred to in
this section as the `Committee').
``(2) Purpose.--The Committee shall--
``(A) advise and consult with the Commission on--
``(i) regulatory priorities of the Commission;
``(ii) issues relating to the regulation of securities
products, trading strategies, and fee structures, and the
effectiveness of disclosure;
``(iii) initiatives to protect investor interest; and
``(iv) initiatives to promote investor confidence and the
integrity of the securities marketplace; and
``(B) submit to the Commission such findings and
recommendations as the Committee determines are appropriate,
including recommendations for proposed legislative changes.
``(b) Membership.--
``(1) In general.--The members of the Committee shall be--
``(A) the Investor Advocate;
``(B) a representative of State securities commissions;
``(C) a representative of the interests of senior citizens;
and
``(D) not fewer than 10, and not more than 20, members
appointed by the Commission, from among individuals who--
``(i) represent the interests of individual equity and debt
investors, including investors in mutual funds;
``(ii) represent the interests of institutional investors,
including the interests of pension funds and registered
investment companies;
``(iii) are knowledgeable about investment issues and
decisions; and
``(iv) have reputations of integrity.
``(2) Term.--Each member of the Committee appointed under
paragraph (1)(B) shall serve for a term of 4 years.
``(3) Members not commission employees.--Members appointed
under paragraph (1)(B) shall not be deemed to be employees or
agents of the Commission solely because of membership on the
Committee.
``(c) Chairman; Vice Chairman; Secretary; Assistant
Secretary.--
``(1) In general.--The members of the Committee shall
elect, from among the members of the Committee--
``(A) a chairman, who may not be employed by an issuer;
``(B) a vice chairman, who may not be employed by an
issuer;
``(C) a secretary; and
``(D) an assistant secretary.
``(2) Term.--Each member elected under paragraph (1) shall
serve for a term of 3 years in the capacity for which the
member was elected under paragraph (1).
``(d) Meetings.--
``(1) Frequency of meetings.--The Committee shall meet--
``(A) not less frequently than twice annually, at the call
of the chairman of the Committee; and
``(B) from time to time, at the call of the Commission.
``(2) Notice.--The chairman of the Committee shall give the
members of the Committee written notice of each meeting, not
later than 2 weeks before the date of the meeting.
``(e) Compensation and Travel Expenses.--Each member of the
Committee who is not a full-time employee of the United
States shall--
``(1) be compensated at a rate not to exceed the daily
equivalent of the annual rate of basic pay in effect for a
position at level V of the Executive Schedule under section
5316 of title 5, United States Code, for each day during
which the member is engaged in the actual performance of the
duties of the Committee; and
``(2) while away from the home or regular place of business
of the member in the performance of services for the
Committee, be allowed travel expenses, including per diem in
lieu of subsistence, in the same manner as persons employed
intermittently in the Government service are allowed expenses
under section 5703(b) of title 5, United States Code.
``(f) Staff.--The Commission shall make available to the
Committee such staff as the chairman of the Committee
determines are necessary to carry out this section.
``(g) Review by Commission.--The Commission shall--
``(1) review the findings and recommendations of the
Committee; and
``(2) each time the Committee submits a finding or
recommendation to the Commission, issue a public statement--
``(A) assessing the finding or recommendation of the
Committee; and
``(B) disclosing the action, if any, the Commission intends
to take with respect to the finding or recommendation.
``(h) Committee Findings.--Nothing in this section shall
require the Commission to agree to or act upon any finding or
recommendation of the Committee.
``(i) Federal Advisory Committee Act.--The Federal Advisory
Committee Act (5 U.S.C. App.) shall not apply with respect to
the Committee and its activities.
``(j) Authorization of Appropriations.--There is authorized
to be appropriated to the Commission such sums as are
necessary to carry out this section.''.

SEC. 912. CLARIFICATION OF AUTHORITY OF THE COMMISSION TO
ENGAGE IN INVESTOR TESTING.

Section 19 of the Securities Act of 1933 (15 U.S.C. 77s) is
amended by adding at the end the following:
``(e) Evaluation of Rules or Programs.--For the purpose of
evaluating any rule or program of the Commission issued or
carried out under any provision of the securities laws, as
defined in section 3 of the Securities Exchange Act of 1934
(15 U.S.C. 78c), and the purposes of considering, proposing,
adopting, or engaging in any such rule or program or
developing new rules or programs, the Commission may--
``(1) gather information from and communicate with
investors or other members of the public;
``(2) engage in such temporary investor testing programs as
the Commission determines are in the public interest or would
protect investors; and
``(3) consult with academics and consultants, as necessary
to carry out this subsection.

[[Page S2911]]

``(f) Rule of Construction.--For purposes of the Paperwork
Reduction Act (44 U.S.C. 3501 et seq.), any action taken
under subsection (e) shall not be construed to be a
collection of information.''.

SEC. 913. STUDY AND RULEMAKING REGARDING OBLIGATIONS OF
BROKERS, DEALERS, AND INVESTMENT ADVISERS.

(a) Definitions.--In this section--
(1) the term ``FINRA'' means the Financial Industry
Regulatory Authority; and
(2) the term ``retail customer'' means an individual
customer of a broker, dealer, investment adviser, person
associated with a broker or dealer, or a person associated
with an investment adviser.
(b) In General.--The Commission shall conduct a study to
evaluate--
(1) the effectiveness of existing legal or regulatory
standards of care for brokers, dealers, investment advisers,
persons associated with brokers or dealers, and persons
associated with investment advisers for providing
personalized investment advice and recommendations about
securities to retail customers imposed by the Commission and
FINRA, and other Federal and State legal or regulatory
standards; and
(2) whether there are legal or regulatory gaps or overlap
in legal or regulatory standards in the protection of retail
customers relating to the standards of care for brokers,
dealers, investment advisers, persons associated with brokers
or dealers, and persons associated with investment advisers
for providing personalized investment advice about securities
to retail customers that should be addressed by rule or
statute.
(c) Considerations.--In conducting the study required under
subsection (b), the Commission shall consider--
(1) the regulatory, examination, and enforcement resources
devoted to, and activities of, the Commission and FINRA to
enforce the standards of care for brokers, dealers,
investment advisers, persons associated with brokers or
dealers, and persons associated with investment advisers when
providing personalized investment advice and recommendations
about securities to retail customers, including--
(A) the frequency of examinations of brokers, dealers, and
investment advisers; and
(B) the length of time of the examinations;
(2) the substantive differences, compared and contrasted in
detail, in the regulation of brokers, dealers, and investment
advisers, when providing personalized investment advice and
recommendations about securities to retail customers,
including the differences in the amount of resources devoted
to the regulation and examination of brokers, dealers, and
investment advisers, by the Commission and FINRA;
(3) the specific instances in which--
(A) the regulation and oversight of investment advisers
provide greater protection to retail customers than the
regulation and oversight of brokers and dealers; and
(B) the regulation and oversight of brokers and dealers
provide greater protection to retail customers than the
regulation and oversight of investment advisers;
(4) the existing legal or regulatory standards of State
securities regulators and other regulators intended to
protect retail customers;
(5) the potential impact on retail customers, including the
potential impact on access of retail customers to the range
of products and services offered by brokers and dealers, of
imposing upon brokers, dealers, and persons associated with
brokers or dealers--
(A) the standard of care applied under the Investment
Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) for providing
personalized investment advice about securities to retail
customers of investment advisers; and
(B) other requirements of the Investment Advisers Act of
1940 (15 U.S.C. 80b-1 et seq.);
(6) the potential impact of--
(A) imposing on investment advisers the standard of care
applied by the Commission and FINRA under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.) for providing
recommendations about securities to retail customers of
brokers and dealers and other Commission and FINRA
requirements applicable to brokers and dealers; and
(B) authorizing the Commission to designate 1 or more self-
regulatory organizations to augment the efforts of the
Commission to oversee investment advisers;
(7) the potential impact of eliminating the broker and
dealer exclusion from the definition of ``investment
adviser'' under section 202(a)(11)(C) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-2(a)(11)(C)), in terms
of--
(A) the potential benefits or harm to retail customers that
could result from such a change, including any potential
impact on access to personalized investment advice and
recommendations about securities to retail customers or the
availability of such advice and recommendations;
(B) the number of additional entities and individuals that
would be required to register under, or become subject to,
the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et
seq.), and the additional requirements to which brokers,
dealers, and persons associated with brokers and dealers
would become subject, including--
(i) any potential additional associated person licensing,
registration, and examination requirements; and
(ii) the additional costs, if any, to the additional
entities and individuals; and
(C) the impact on Commission resources to--
(i) conduct examinations of registered investment advisers
and the representatives of registered investment advisers,
including the impact on the examination cycle; and
(ii) enforce the standard of care and other applicable
requirements imposed under the Investment Advisers Act of
1940 (15 U.S.C. 80b-1 et seq.);
(8) the ability of investors to understand the differences
in terms of regulatory oversight and examinations between
brokers, dealers, and investment advisers;
(9) the varying level of services provided by brokers,
dealers, investment advisers, persons associated with brokers
or dealers, and persons associated with investment advisers
to retail customers and the varying scope and terms of retail
customer relationships of brokers, dealers, investment
advisers, persons associated with brokers or dealers, and
persons associated with investment advisers with such retail
customers;
(10) any potential benefits or harm to retail customers
that could result from any potential changes in the
regulatory requirements or legal standards affecting brokers,
dealers, investment advisers, persons associated with brokers
or dealers, and persons associated with investment advisers
relating to their obligations to retail customers, including
any potential impact on--
(A) protection from fraud;
(B) access to personalized investment advice, and
recommendations about securities to retail customers; or
(C) the availability of such advice and recommendations;
(11) the additional costs and expenses to retail customers
and to brokers, dealers, and investment advisers resulting
from potential changes in the regulatory requirements or
legal standards affecting brokers, dealers, investment
advisers, persons associated with brokers or dealers, and
persons associated with investment advisers relating to their
obligations to retail customers; and
(12) any other consideration that the Commission deems
necessary and appropriate to effectively execute the study
required under subsection (b).
(d) Report.--
(1) In general.--Not later than 1 year after the date of
enactment of this Act, the Commission shall submit a report
on the study required under subsection (b) to--
(A) the Committee on Banking, Housing, and Urban Affairs of
the Senate; and
(B) the Committee on Financial Services of the House of
Representatives.
(2) Content requirements.--The report required under
paragraph (1) shall describe the findings, conclusions, and
recommendations of the Commission from the study required
under subsection (b), including--
(A) a description of the considerations, analysis, and
public and industry input that the Commission considered, as
required under subsection (e), to make such findings,
conclusions, and policy recommendations; and
(B) an analysis of--
(i) whether any identified legal or regulatory gaps or
overlap in legal or regulatory standards in the protection of
retail customers relating to the standards of care for
brokers, dealers, investment advisers, persons associated
with brokers or dealers, and persons associated with
investment advisers for providing personalized investment
advice about securities to retail customers can be addressed
by rule; and
(ii) whether, and the extent to which, the Commission would
require additional statutory authority to address such gaps
or overlap.
(e) Public Comment.--The Commission shall seek and consider
public input, comments, and data in order to prepare the
report required under subsection (d).
(f) Rulemaking.--
(1) In general.--If the study required under subsection (b)
identifies any gaps or overlap in the legal or regulatory
standards in the protection of retail customers relating to
the standards of care for brokers, dealers, investment
advisers, persons associated with brokers or dealers, and
persons associated with investment advisers for providing
personalized investment advice about securities to such
retail customers, the Commission, not later than 2 years
after the date of enactment of this Act, shall--
(A) commence a rulemaking, as necessary or appropriate in
the public interest and for the protection of retail
customers, to address such regulatory gaps and overlap that
can be addressed by rule, using its authority under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) and
the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et
seq.); and
(B) consider and take into account the findings,
conclusions, and recommendations of the study required under
this section.
(2) Rule of construction.--Nothing in this section shall be
construed to limit the rulemaking authority of the Commission
under any other provision of Federal law.

SEC. 914. OFFICE OF THE INVESTOR ADVOCATE.

Section 4 of the Securities Exchange Act of 1934 (15 U.S.C.
78d) is amended by adding at the end the following:
``(g) Office of the Investor Advocate.--
``(1) Office established.--There is established within the
Commission the Office of the Investor Advocate (in this
subsection referred to as the `Office').
``(2) Investor advocate.--
``(A) In general.--The head of the Office shall be the
Investor Advocate, who shall--
``(i) report directly to the Chairman; and

[[Page S2912]]

``(ii) be appointed by the Chairman, in consultation with
the Commission, from among individuals having experience in
advocating for the interests of investors in securities and
investor protection issues, from the perspective of
investors.
``(B) Compensation.--The annual rate of pay for the
Investor Advocate shall be equal to the highest rate of
annual pay for a Senior Executive Service position within the
Commission.
``(C) Limitation on service.--An individual who serves as
the Investor Advocate may not be employed by the Commission--
``(i) during the 2-year period ending on the date of
appointment as Investor Advocate; or
``(ii) during the 5-year period beginning on the date on
which the person ceases to serve as the Investor Advocate.
``(3) Staff of office.--The Investor Advocate may retain or
employ independent counsel, research staff, and service
staff, as the Investor Advocate deems necessary to carry out
the functions, powers, and duties of the Office.
``(4) Functions of the investor advocate.--The Investor
Advocate shall--
``(A) assist retail investors in resolving significant
problems such investors may have with the Commission or with
self-regulatory organizations;
``(B) identify areas in which investors would benefit from
changes in the regulations of the Commission or the rules of
self-regulatory organizations;
``(C) identify problems that investors have with financial
service providers and investment products;
``(D) analyze the potential impact on investors of--
``(i) proposed regulations of the Commission; and
``(ii) proposed rules of self-regulatory organizations
registered under this title; and
``(E) to the extent practicable, propose to the Commission
changes in the regulations or orders of the Commission and to
Congress any legislative, administrative, or personnel
changes that may be appropriate to mitigate problems
identified under this paragraph and to promote the interests
of investors.
``(5) Access to documents.--The Commission shall ensure
that the Investor Advocate has full access to the documents
of the Commission and any self-regulatory organization, as
necessary to carry out the functions of the Office.
``(6) Annual reports.--
``(A) Report on objectives.--
``(i) In general.--Not later than June 30 of each year
after 2010, the Investor Advocate 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 objectives of the Investor
Advocate for the following fiscal year.
``(ii) Contents.--Each report required under clause (i)
shall contain full and substantive analysis and explanation.
``(B) Report on activities.--
``(i) In general.--Not later than December 31 of each year
after 2010, the Investor Advocate 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 activities of the Investor
Advocate during the immediately preceding fiscal year.
``(ii) Contents.--Each report required under clause (i)
shall include--

``(I) appropriate statistical information and full and
substantive analysis;
``(II) information on steps that the Investor Advocate has
taken during the reporting period to improve investor
services and the responsiveness of the Commission and self-
regulatory organizations to investor concerns;
``(III) a summary of the most serious problems encountered
by investors during the reporting period;
``(IV) an inventory of the items described in subclauses
(III) that includes--

``(aa) identification of any action taken by the Commission
or the self-regulatory organization and the result of such
action;
``(bb) the length of time that each item has remained on
such inventory; and
``(cc) for items on which no action has been taken, the
reasons for inaction, and an identification of any official
who is responsible for such action;

``(V) recommendations for such administrative and
legislative actions as may be appropriate to resolve problems
encountered by investors; and
``(VI) any other information, as determined appropriate by
the Investor Advocate.

``(iii) Independence.--Each report required under this
paragraph shall be provided directly to the Committees listed
in clause (i) without any prior review or comment from the
Commission, any commissioner, any other officer or employee
of the Commission, or the Office of Management and Budget.
``(iv) Confidentiality.--No report required under clause
(i) may contain confidential information.
``(7) Regulations.--The Commission shall, by regulation,
establish procedures requiring a formal response to all
recommendations submitted to the Commission by the Investor
Advocate, not later than 3 months after the date of such
submission.''.

SEC. 915. STREAMLINING OF FILING PROCEDURES FOR SELF-
REGULATORY ORGANIZATIONS.

(a) Filing Procedures.--Section 19(b) of the Securities
Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended by
striking paragraph (2) (including the undesignated matter
immediately following subparagraph (B)) and inserting the
following:
``(2) Approval process.--
``(A) Approval process established.--
``(i) In general.--Except as provided in clause (ii), not
later than 45 days after the date of publication of a
proposed rule change under paragraph (1), the Commission
shall--

``(I) by order, approve the proposed rule change; or
``(II) institute proceedings under subparagraph (B) to
determine whether the proposed rule change should be
disapproved.

``(ii) Extension of time period.--The Commission may extend
the period established under clause (i) by not more than an
additional 45 days, if--

``(I) the Commission determines that a longer period is
appropriate and publishes the reasons for such determination;
or
``(II) the self-regulatory organization that filed the
proposed rule change consents to the longer period.

``(B) Proceedings.--
``(i) Notice and hearing.--If the Commission does not
approve a proposed rule change under subparagraph (A), the
Commission shall provide to the self-regulatory organization
that filed the proposed rule change--

``(I) notice of the grounds for disapproval under
consideration; and
``(II) opportunity for hearing, to be concluded not later
than 180 days after the date of publication of notice of the
filing of the proposed rule change.

``(ii) Order of approval or disapproval.--

``(I) In general.--Except as provided in subclause (II),
not later than 180 days after the date of publication under
paragraph (1), the Commission shall issue an order approving
or disapproving the proposed rule change.
``(II) Extension of time period.--The Commission may extend
the period for issuance under clause (I) by not more than 60
days, if--

``(aa) the Commission determines that a longer period is
appropriate and publishes the reasons for such determination;
or
``(bb) the self-regulatory organization that filed the
proposed rule change consents to the longer period.
``(C) Standards for approval and disapproval.--
``(i) Approval.--The Commission shall approve a proposed
rule change of a self-regulatory organization if it finds
that such proposed rule change is consistent with the
requirements of this title and the rules and regulations
issued under this title that are applicable to such
organization.
``(ii) Disapproval.--The Commission shall disapprove a
proposed rule change of a self-regulatory organization if it
does not make a finding described in clause (i).
``(iii) Time for approval.--The Commission may not approve
a proposed rule change earlier than 30 days after the date of
publication under paragraph (1), unless the Commission finds
good cause for so doing and publishes the reason for the
finding.
``(D) Result of failure to institute or conclude
proceedings.--A proposed rule change shall be deemed to have
been approved by the Commission, if--
``(i) the Commission does not approve the proposed rule
change or begin proceedings under subparagraph (B) within the
period described in subparagraph (A); or
``(ii) the Commission does not issue an order approving or
disapproving the proposed rule change under subparagraph (B)
within the period described in subparagraph (B)(ii).
``(E) Publication date based on federal register
publishing.--For purposes of this paragraph, if, after filing
a proposed rule change with the Commission pursuant to
paragraph (1), a self-regulatory organization publishes a
notice of the filing of such proposed rule change, together
with the substantive terms of such proposed rule change, on a
publicly accessible website, the Commission shall thereafter
send the notice to the Federal Register for publication
thereof under paragraph (1) within 15 days of the date on
which such website publication is made. If the Commission
fails to send the notice for publication thereof within such
15 day period, then the date of publication shall be deemed
to be the date on which such website publication was made.''.
(b) Clarification of Filing Date.--
(1) Rule of construction.--Section 19(b) of the Securities
Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended by adding
at the end the following:
``(10) Rule of construction relating to filing date of
proposed rule changes.--
``(A) In general.--For purposes of this subsection, the
date of filing of a proposed rule change shall be deemed to
be the date on which the Commission receives the proposed
rule change.
``(B) Exception.--A proposed rule change has not been
received by the Commission for purposes of subparagraph (A)
if, not later than 7 days after the date of receipt by the
Commission, the Commission notifies the self-regulatory
organization that such proposed rule change does not comply
with the rules of the Commission relating to the required
form of a proposed rule change.''.
(2) Publication.--Section 19(b)(1) of the Securities
Exchange Act of 1934 (15 U.S.C. 78s(b)(1)) is amended by
striking ``upon'' and inserting ``as soon as practicable
after the date of''.
(c) Effective Date of Proposed Rules.--Section 19(b)(3) of
the Securities Exchange Act of 1934 (15 U.S.C. 78s(b)(3)) is
amended--

[[Page S2913]]

(1) in subparagraph (A)--
(A) by striking ``may take effect'' and inserting ``shall
take effect''; and
(B) by inserting ``on any person, whether or not the person
is a member of the self-regulatory organization'' after
``charge imposed by the self-regulatory organization''; and
(2) in subparagraph (C)--
(A) by amending the second sentence to read as follows:
``At any time within the 60-day period beginning on the date
of filing of such a proposed rule change in accordance with
the provisions of paragraph (1), the Commission summarily may
temporarily suspend the change in the rules of the self-
regulatory organization made thereby, if it appears to the
Commission that such action is necessary or appropriate in
the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of this title.'';
(B) by inserting after the second sentence the following:
``If the Commission takes such action, the Commission shall
institute proceedings under paragraph (2)(B) to determine
whether the proposed rule should be approved or
disapproved.''; and
(C) in the third sentence, by striking ``the preceding
sentence'' and inserting ``this subparagraph''.
(d) Conforming Change.--Section 19(b)(4)(D) of the
Securities Exchange Act of 1934 (15 U.S.C. 78s(b)(4)(D)) is
amended to read as follows:
``(D)(i) The Commission shall order the temporary
suspension of any change in the rules of a clearing agency
made by a proposed rule change that has taken effect under
paragraph (3), if the appropriate regulatory agency for the
clearing agency notifies the Commission not later than 30
days after the date on which the proposed rule change was
filed of--
``(I) the determination by the appropriate regulatory
agency that the rules of such clearing agency, as so changed,
may be inconsistent with the safeguarding of securities or
funds in the custody or control of such clearing agency or
for which it is responsible; and
``(II) the reasons for the determination described in
subclause (I).
``(ii) If the Commission takes action under clause (i), the
Commission shall institute proceedings under paragraph (2)(B)
to determine if the proposed rule change should be approved
or disapproved.''.

SEC. 916. STUDY REGARDING FINANCIAL LITERACY AMONG INVESTORS.

(a) In General.--The Commission shall conduct a study to
identify--
(1) the existing level of financial literacy among retail
investors, including subgroups of investors identified by the
Commission;
(2) methods to improve the timing, content, and format of
disclosures to investors with respect to financial
intermediaries, investment products, and investment services;
(3) the most useful and understandable relevant information
that retail investors need to make informed financial
decisions before engaging a financial intermediary or
purchasing an investment product or service that is typically
sold to retail investors, including shares of open-end
companies, as that term is defined in section 5 of the
Investment Company Act of 1940 (15 U.S.C. 80a-5) that are
registered under section 8 of that Act;
(4) methods to increase the transparency of expenses and
conflicts of interests in transactions involving investment
services and products, including shares of open-end companies
described in paragraph (3);
(5) the most effective existing private and public efforts
to educate investors; and
(6) in consultation with the Financial Literacy and
Education Commission, a strategy (including, to the extent
practicable, measurable goals and objectives) to increase the
financial literacy of investors in order to bring about a
positive change in investor behavior.
(b) Report.--Not later than 2 years after the date of
enactment of this Act, the Commission shall submit a report
on the study required under subsection (a) to--
(1) the Committee on Banking, Housing, and Urban Affairs of
the Senate; and
(2) the Committee on Financial Services of the House of
Representatives.

SEC. 917. STUDY REGARDING MUTUAL FUND ADVERTISING.

(a) In General.--The Comptroller General of the United
States shall conduct a study on mutual fund advertising to
identify--
(1) existing and proposed regulatory requirements for open-
end investment company advertisements;
(2) current marketing practices for the sale of open-end
investment company shares, including the use of past
performance data, funds that have merged, and incubator
funds;
(3) the impact of such advertising on consumers; and
(4) recommendations to improve investor protections in
mutual fund advertising and additional information necessary
to ensure that investors can make informed financial
decisions when purchasing shares.
(b) Report.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General of the United
States shall submit a report on the results of the study
conducted under subsection (a) to--
(1) the Committee on Banking, Housing, and Urban Affairs of
the United States Senate; and
(2) the Committee on Financial Services of the House of
Representatives.

SEC. 918. CLARIFICATION OF COMMISSION AUTHORITY TO REQUIRE
INVESTOR DISCLOSURES BEFORE PURCHASE OF
INVESTMENT PRODUCTS AND SERVICES.

Section 15 of the Securities Exchange Act of 1934 (15
U.S.C. 78o) is amended by adding at the end the following:
``(k) Disclosures to Retail Investors.--
``(1) In general.--Notwithstanding any other provision of
the securities laws, the Commission may issue rules
designating documents or information that shall be provided
by a broker or dealer to a retail investor before the
purchase of an investment product or service by the retail
investor.
``(2) Considerations.--In developing any rules under
paragraph (1), the Commission shall consider whether the
rules will promote investor protection, efficiency,
competition, and capital formation.
``(3) Form and contents of documents and information.--Any
documents or information designated under a rule promulgated
under paragraph (1) shall--
``(A) be in a summary format; and
``(B) contain clear and concise information about--
``(i) investment objectives, strategies, costs, and risks;
and
``(ii) any compensation or other financial incentive
received by a broker, dealer, or other intermediary in
connection with the purchase of retail investment
products.''.

SEC. 919. STUDY ON CONFLICTS OF INTEREST.

(a) In General.--The Comptroller General of the United
States shall conduct a study--
(1) to identify and examine potential conflicts of interest
that exist between the staffs of the investment banking and
equity and fixed income securities analyst functions within
the same firm; and
(2) to make recommendations to Congress designed to protect
investors in light of such conflicts.
(b) Considerations.--In conducting the study under
subsection (a), the Comptroller General shall--
(1) consider--
(A) the potential for investor harm resulting from
conflicts, including consideration of the forms of misconduct
engaged in by the several securities firms and individuals
that entered into the Global Analyst Research Settlements in
2003 (also known as the ``Global Settlement'');
(B) the nature and benefits of the undertakings to which
those firms agreed in enforcement proceedings, including
firewalls between research and investment banking, separate
reporting lines, dedicated legal and compliance staffs,
allocation of budget, physical separation, compensation,
employee performance evaluations, coverage decisions,
limitations on soliciting investment banking business,
disclosures, transparency, and other measures;
(C) whether any such undertakings should be codified and
applied permanently to securities firms, or whether the
Commission should adopt rules applying any such undertakings
to securities firms; and
(D) whether to recommend regulatory or legislative measures
designed to mitigate possible adverse consequences to
investors arising from the conflicts of interest or to
enhance investor protection or confidence in the integrity of
the securities markets; and
(2) consult with State attorneys general, State securities
officials, the Commission, the Financial Industry Regulatory
Authority (``FINRA''), NYSE Regulation, investor advocates,
brokers, dealers, retail investors, institutional investors,
and academics.
(c) Report.--The Comptroller General shall submit a report
on the results of the study required by this section 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 18 months after the date
of enactment of this Act.

SEC. 919A. STUDY ON IMPROVED INVESTOR ACCESS TO INFORMATION
ON INVESTMENT ADVISERS AND BROKER-DEALERS.

(a) Study.--
(1) In general.--Not later than 6 months after the date of
enactment of this Act, the Commission shall complete a study,
including recommendations, of ways to improve the access of
investors to registration information (including disciplinary
actions, regulatory, judicial, and arbitration proceedings,
and other information) about registered and previously
registered investment advisers, associated persons of
investment advisers, brokers and dealers and their associated
persons on the existing Central Registration Depository and
Investment Adviser Registration Depository systems, as well
as identify additional information that should be made
publicly available.
(2) Contents.--The study required by subsection (a) shall
include an analysis of the advantages and disadvantages of
further centralizing access to the information contained in
the 2 systems, including--
(A) identification of those data pertinent to investors;
and
(B) the identification of the method and format for
displaying and publishing such data to enhance accessibility
by and utility to investors.
(b) Implementation.--Not later than 18 months after the
date of completion of the study required by subsection (a),
the Commission shall implement any recommendations of the
study.

[[Page S2914]]

SEC. 919B. STUDY ON FINANCIAL PLANNERS AND THE USE OF
FINANCIAL DESIGNATIONS.

(a) In General.--The Comptroller General of the United
States shall conduct a study to evaluate--
(1) the effectiveness of State and Federal regulations to
protect consumers from individuals who hold themselves out as
financial planners through the use of misleading
designations;
(2) current State and Federal oversight structure and
regulations for financial planners; and
(3) legal or regulatory gaps in the regulation of financial
planners and other individuals who provide or offer to
provide financial planning services to consumers.
(b) Considerations.--In conducting the study required under
subsection (a), the Comptroller General shall consider--
(1) the role of financial planners in providing advice
regarding the management of financial resources, including
investment planning, income tax planning, education planning,
retirement planning, estate planning, and risk management;
(2) whether current regulations at the State and Federal
level provide adequate ethical and professional standards for
financial planners;
(3) the use of the title ``financial planner'' and
misleading designations in connection with sale of financial
products, including insurance and securities;
(4) the possible risk posed to consumers by individuals who
hold themselves out as financial planners through the use of
misleading designations, including ``financial advisor'' and
``financial consultant'';
(5) the ability of consumers to understand licensing
requirements and standards of care that apply to individuals
who provide financial advice;
(6) the possible benefits to consumers of regulation and
professional oversight of financial planners; and
(7) any other consideration that the Comptroller General
deems necessary or appropriate to effectively execute the
study required under subsection (a).
(c) Recommendations.--In providing recommendations for the
appropriate regulation of financial planners and other
individuals who provide or offer to provide financial
planning services, in order to protect consumers of financial
planning services, the Comptroller General shall consider--
(1) the appropriate structure for regulation of financial
planners and individuals providing financial planning
services; and
(2) the appropriate scope of the regulations needed to
protect consumers, including but not limited to the need to
establish competency standards, practice standards, ethical
guidelines, disciplinary authority, and transparency to
consumers.
(d) Report.--
(1) In general.--Not later than 180 days after the date of
enactment of this Act, the Comptroller General shall submit a
report on the study required under subsection (a) to--
(A) the Committee on Banking, Housing, and Urban Affairs of
the Senate;
(B) the Special Committee on Aging of the Senate; and
(C) the Committee on Financial Services of the House of
Representatives.
(2) Content requirements.--The report required under
paragraph (1) shall describe the findings and determinations
made by the Comptroller General in carrying out the study
required under subsection (a), including a description of the
considerations, analysis, and government, public, industry,
nonprofit and consumer input that the Comptroller General
considered to make such findings, conclusions, and
legislative, regulatory, or other recommendations.

Subtitle B--Increasing Regulatory Enforcement and Remedies

SEC. 921. AUTHORITY TO ISSUE RULES RELATED TO MANDATORY
PREDISPUTE ARBITRATION.

(a) Amendment to Securities Exchange Act of 1934.--Section
15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o), as
amended by section 918, is amended by adding at the end the
following:
``(l) Authority to Restrict Mandatory Predispute
Arbitration.--The Commission may conduct a rulemaking to
reaffirm or prohibit, or impose or not impose conditions or
limitations on the use of, agreements that require customers
or clients of any broker, dealer, or municipal securities
dealer to arbitrate any dispute between them and such broker,
dealer, or municipal securities dealer that arises under the
securities laws or the rules of a self-regulatory
organization, if the Commission finds that such
reaffirmation, prohibition, imposition of conditions or
limitations, or other action is in the public interest and
for the protection of investors.''.
(b) Amendment to Investment Advisers Act of 1940.--Section
205 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-5)
is amended by adding at the end the following:
``(f) Authority to Issue Rules Related to Mandatory
Predispute Arbitration.--The Commission may conduct
rulemaking to reaffirm or prohibit, or impose or not impose
conditions or limitations on the use of, agreements that
require customers or clients of any investment adviser to
arbitrate any dispute between them and such investment
adviser that arises under the securities laws, as defined in
section 3 of the Securities Exchange Act of 1934 (15 U.S.C.
78c), or the rules of a self-regulatory organization, if the
Commission finds that such reaffirmation, prohibition,
imposition of conditions or limitations, or other action is
in the public interest and for the protection of
investors.''.

SEC. 922. WHISTLEBLOWER PROTECTION.

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended by inserting after section 21E the following:

``SEC. 21F. SECURITIES WHISTLEBLOWER INCENTIVES AND
PROTECTION.

``(a) Definitions.--In this section the following
definitions shall apply:
``(1) Covered judicial or administrative action.--The term
`covered judicial or administrative action' means any
judicial or administrative action brought by the Commission
under the securities laws that results in monetary sanctions
exceeding $1,000,000.
``(2) Fund.--The term `Fund' means the Securities and
Exchange Commission Investor Protection Fund.
``(3) Original information.--The term `original
information' means information that--
``(A) is derived from the independent knowledge or analysis
of a whistleblower;
``(B) is not known to the Commission from any other source,
unless the whistleblower is the original source of the
information; and
``(C) is not exclusively derived from an allegation made in
a judicial or administrative hearing, in a governmental
report, hearing, audit, or investigation, or from the news
media, unless the whistleblower is a source of the
information.
``(4) Monetary sanctions.--The term `monetary sanctions',
when used with respect to any judicial or administrative
action, means--
``(A) any monies, including penalties, disgorgement, and
interest, ordered to be paid; and
``(B) any monies deposited into a disgorgement fund or
other fund pursuant to section 308(b) of the Sarbanes-Oxley
Act of 2002 (15 U.S.C. 7246(b)), as a result of such action
or any settlement of such action.
``(5) Related action.--The term `related action', when used
with respect to any judicial or administrative action brought
by the Commission under the securities laws, means any
judicial or administrative action brought by an entity
described in subclauses (I) through (IV) of subsection
(h)(2)(D)(i) that is based upon the original information
provided by a whistleblower pursuant to subsection (a) that
led to the successful enforcement of the Commission action.
``(6) Whistleblower.--The term `whistleblower' means any
individual, or 2 or more individuals acting jointly, who
provides information relating to a violation of the
securities laws to the Commission, in a manner established,
by rule or regulation, by the Commission.
``(b) Awards.--
``(1) In general.--In any covered judicial or
administrative action, or related action, the Commission,
under regulations prescribed by the Commission and subject to
subsection (c), shall pay an award or awards to 1 or more
whistleblowers who voluntarily provided original information
to the Commission that led to the successful enforcement of
the covered judicial or administrative action, or related
action, in an aggregate amount equal to--
``(A) not less than 10 percent, in total, of what has been
collected of the monetary sanctions imposed in the action or
related actions; and
``(B) not more than 30 percent, in total, of what has been
collected of the monetary sanctions imposed in the action or
related actions.
``(2) Payment of awards.--Any amount paid under paragraph
(1) shall be paid from the Fund.
``(c) Determination of Amount of Award; Denial of Award.--
``(1) Determination of amount of award.--
``(A) Discretion.--The determination of the amount of an
award made under subsection (b) shall be in the discretion of
the Commission.
``(B) Criteria.--In determining the amount of an award made
under subsection (b), the Commission shall take into
account--
``(i) the significance of the information provided by the
whistleblower to the success of the covered judicial or
administrative action;
``(ii) the degree of assistance provided by the
whistleblower and any legal representative of the
whistleblower in a covered judicial or administrative action;
``(iii) the programmatic interest of the Commission in
deterring violations of the securities laws by making awards
to whistleblowers who provide information that lead to the
successful enforcement of such laws; and
``(iv) such additional relevant factors as the Commission
may establish by rule or regulation.
``(2) Denial of award.--No award under subsection (b) shall
be made--
``(A) to any whistleblower who is, or was at the time the
whistleblower acquired the original information submitted to
the Commission, a member, officer, or employee of--
``(i) an appropriate regulatory agency;
``(ii) the Department of Justice;
``(iii) a self-regulatory organization;
``(iv) the Public Company Accounting Oversight Board; or
``(v) a law enforcement organization;
``(B) to any whistleblower who is convicted of a criminal
violation related to the judicial or administrative action
for which the whistleblower otherwise could receive an award
under this section;

[[Page S2915]]

``(C) to any whistleblower who gains the information
through the performance of an audit of financial statements
required under the securities laws and for whom such
submission would be contrary to the requirements of section
101A of the Securities Exchange Act of 1934 (15 U.S.C. 78j-
1); or
``(D) to any whistleblower who fails to submit information
to the Commission in such form as the Commission may, by
rule, require.
``(d) Representation.--
``(1) Permitted representation.--Any whistleblower who
makes a claim for an award under subsection (b) may be
represented by counsel.
``(2) Required representation.--
``(A) In general.--Any whistleblower who anonymously makes
a claim for an award under subsection (b) shall be
represented by counsel if the whistleblower anonymously
submits the information upon which the claim is based.
``(B) Disclosure of identity.--Prior to the payment of an
award, a whistleblower shall disclose the identity of the
whistleblower and provide such other information as the
Commission may require, directly or through counsel for the
whistleblower.
``(e) No Contract Necessary.--No contract with the
Commission is necessary for any whistleblower to receive an
award under subsection (b), unless otherwise required by the
Commission by rule or regulation.
``(f) Appeals.--Any determination made under this section,
including whether, to whom, or in what amount to make awards,
shall be in the discretion of the Commission. Any such
determination may be appealed to the appropriate court of
appeals of the United States not more than 30 days after the
determination is issued by the Commission. The court shall
review the determination made by the Commission in accordance
with section 706 of title 5, United States Code.
``(g) Investor Protection Fund.--
``(1) Fund established.--There is established in the
Treasury of the United States a fund to be known as the
`Securities and Exchange Commission Investor Protection
Fund'.
``(2) Use of fund.--The Fund shall be available to the
Commission, without further appropriation or fiscal year
limitation, for--
``(A) paying awards to whistleblowers as provided in
subsection (b); and
``(B) funding the activities of the Inspector General of
the Commission under section 4(i).
``(3) Deposits and credits.--There shall be deposited into
or credited to the Fund an amount equal to--
``(A) the amount awarded under subsection (b) from any
monetary sanction collected by the Commission in any judicial
or administrative action brought by the Commission that is
based on information provided by a whistleblower under the
securities laws, unless, the balance of the Fund at the time
the monetary sanction is collected exceeds $200,000,000;
``(B) any monetary sanction added to a disgorgement fund or
other fund pursuant to section 308 of the Sarbanes-Oxley Act
of 2002 (15 U.S.C. 7246) that is not distributed to the
victims for whom the disgorgement fund was established,
unless the balance of the disgorgement fund at the time the
determination is made not to distribute the monetary sanction
to such victims exceeds $100,000,000; and
``(C) all income from investments made under paragraph (4).
``(4) Investments.--
``(A) Amounts in fund may be invested.--The Commission may
request the Secretary of the Treasury to invest the portion
of the Fund that is not, in the discretion of the Commission,
required to meet the current needs of the Fund.
``(B) Eligible investments.--Investments shall be made by
the Secretary of the Treasury 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 Fund as determined by the Commission on the
record.
``(C) Interest and proceeds credited.--The interest on, and
the proceeds from the sale or redemption of, any obligations
held in the Fund shall be credited to the Fund.
``(5) Reports to congress.--Not later than October 30 of
each fiscal year beginning after the date of enactment of
this subsection, the Commission 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--
``(A) the whistleblower award program, established under
this section, including--
``(i) a description of the number of awards granted; and
``(ii) the types of cases in which awards were granted
during the preceding fiscal year;
``(B) the balance of the Fund at the beginning of the
preceding fiscal year;
``(C) the amounts deposited into or credited to the Fund
during the preceding fiscal year;
``(D) the amount of earnings on investments made under
paragraph (4) during the preceding fiscal year;
``(E) the amount paid from the Fund during the preceding
fiscal year to whistleblowers pursuant to subsection (b);
``(F) the balance of the Fund at the end of the preceding
fiscal year; and
``(G) a complete set of audited financial statements,
including--
``(i) a balance sheet;
``(ii) income statement; and
``(iii) cash flow analysis.
``(h) Protection of Whistleblowers.--
``(1) Prohibition against retaliation.--
``(A) In general.--No employer may discharge, demote,
suspend, threaten, harass, directly or indirectly, or in any
other manner discriminate against, a whistleblower in the
terms and conditions of employment because of any lawful act
done by the whistleblower--
``(i) in providing information to the Commission in
accordance with subsection (a); or
``(ii) in assisting in any investigation or judicial or
administrative action of the Commission based upon or related
to such information.
``(B) Enforcement.--
``(i) Cause of action.--An individual who alleges discharge
or other discrimination in violation of subparagraph (A) may
bring an action under this subsection in the appropriate
district court of the United States for the relief provided
in subparagraph (C).
``(ii) Subpoenas.--A subpoena requiring the attendance of a
witness at a trial or hearing conducted under this section
may be served at any place in the United States.
``(iii) Statute of limitations.--

``(I) In general.--An action under this subsection may not
be brought--

``(aa) more than 6 years after the date on which the
violation of subparagraph (A) occurred; or
``(bb) more than 3 years after the date when facts material
to the right of action are known or reasonably should have
been known by the employee alleging a violation of
subparagraph (A).

``(II) Required action within 10 years.--Notwithstanding
subclause (I), an action under this subsection may not in any
circumstance be brought more than 10 years after the date on
which the violation occurs.

``(C) Relief.--Relief for an individual prevailing in an
action brought under subparagraph (B) shall include--
``(i) reinstatement with the same seniority status that the
individual would have had, but for the discrimination;
``(ii) 2 times the amount of back pay otherwise owed to the
individual, with interest; and
``(iii) compensation for litigation costs, expert witness
fees, and reasonable attorneys' fees.
``(2) Confidentiality.--
``(A) In general.--Unless and until required to be
disclosed to a defendant or respondent in connection with a
proceeding instituted by the Commission or any entity
described in subparagraph (D), all information provided to
the Commission by a whistleblower--
``(i) in any proceeding in any Federal or State court or
administrative agency--

``(I) shall be confidential and privileged as an
evidentiary matter; and
``(II) shall not be subject to civil discovery or other
legal process; and

``(ii) shall not be subject to disclosure under section 552
of title 5, United States Code (commonly referred to as the
Freedom of Information Act) or under any proceeding under
that section.
``(B) Exempted statute.--For purposes of section 552 of
title 5, United States Code, this paragraph shall be
considered a statute described in subsection (b)(3)(B) of
such section 552.
``(C) Rule of construction.--Nothing in this section is
intended to limit, or shall be construed to limit, the
ability of the Attorney General to present such evidence to a
grand jury or to share such evidence with potential witnesses
or defendants in the course of an ongoing criminal
investigation.
``(D) Availability to government agencies.--
``(i) In general.--Without the loss of its status as
confidential and privileged in the hands of the Commission,
all information referred to in subparagraph (A) may, in the
discretion of the Commission, when determined by the
Commission to be necessary to accomplish the purposes of this
Act and to protect investors, be made available to--

``(I) the Attorney General of the United States;
``(II) an appropriate regulatory authority;
``(III) a self-regulatory organization;
``(IV) a State attorney general in connection with any
criminal investigation;
``(V) any appropriate State regulatory authority;
``(VI) the Public Company Accounting Oversight Board;
``(VII) a foreign securities authority; and
``(VIII) a foreign law enforcement authority.

``(ii) Confidentiality.--

``(I) In general.--Each of the entities described in
subclauses (I) through (VI) of clause (i) shall maintain such
information as confidential and privileged, in accordance
with the requirements established under subparagraph (A).
``(II) Foreign authorities.--Each of the entities described
in subclauses (VII) and (VIII) of clause (i) shall maintain
such information in accordance with such assurances of
confidentiality as the Commission determines appropriate.

``(3) Rights retained.--Nothing in this section shall be
deemed to diminish the rights, privileges, or remedies of any
whistleblower under any Federal or State law, or under any
collective bargaining agreement.

[[Page S2916]]

``(i) Provision of False Information.--A whistleblower
shall not be entitled to an award under this section if the
whistleblower--
``(1) knowingly and willfully makes any false, fictitious,
or fraudulent statement or representation; or
``(2) uses any false writing or document knowing the
writing or document contains any false, fictitious, or
fraudulent statement or entry.
``(j) Rulemaking Authority.--The Commission shall have the
authority to issue such rules and regulations as may be
necessary or appropriate to implement the provisions of this
section consistent with the purposes of this section.''.

SEC. 923. CONFORMING AMENDMENTS FOR WHISTLEBLOWER PROTECTION.

(a) In General.--
(1) Securities act of 1933.--Section 20(d)(3)(A) of the
Securities Act of 1933 (15 U.S.C. 77t(d)(3)(A)) is amended by
inserting ``and section 21F of the Securities Exchange Act of
1934'' after ``the Sarbanes-Oxley Act of 2002''.
(2) Investment company act of 1940.--Section 42(e)(3)(A) of
the Investment Company Act of 1940 (15 U.S.C. 80a-
41(e)(3)(A)) is amended by inserting ``and section 21F of the
Securities Exchange Act of 1934'' after ``the Sarbanes-Oxley
Act of 2002''.
(3) Investment advisers act of 1940.--Section 209(e)(3)(A)
of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
9(e)(3)(A)) is amended by inserting ``and section 21F of the
Securities Exchange Act of 1934'' after ``the Sarbanes-Oxley
Act of 2002''.
(b) Securities Exchange Act.--
(1) Section 21.--Section 21(d)(3)(C)(i) of the Securities
Exchange Act of 1934 (15 U.S.C. 78u(d)(3)(C)(i)) is amended
by inserting ``and section 21F of this title'' after ``the
Sarbanes-Oxley Act of 2002''.
(2) Section 21a.--Section 21A of the Securities Exchange
Act of 1934 (15 U.S.C. 78u-1) is amended--
(A) in subsection (d)(1) by--
(i) striking ``(subject to subsection (e))''; and
(ii) inserting ``and section 21F of this title'' after
``the Sarbanes-Oxley Act of 2002'';
(B) by striking subsection (e); and
(C) by redesignating subsections (f) and (g) as subsections
(e) and (f), respectively.

SEC. 924. IMPLEMENTATION AND TRANSITION PROVISIONS FOR
WHISTLEBLOWER PROTECTION.

(a) Implementing Rules.--The Commission shall issue final
regulations implementing the provisions of section 21F of the
Securities Exchange Act of 1934, as added by this subtitle,
not later than 270 days after the date of enactment of this
Act.
(b) Original Information.--Information provided to the
Commission by a whistleblower in accordance with the
regulations referenced in subsection (a) shall not lose the
status of original information (as defined in section
21F(i)(1) of the Securities Exchange Act of 1934, as added by
this subtitle) solely because the whistleblower provided the
information prior to the effective date of the regulations,
provided that the information is--
(1) provided by the whistleblower after the date of
enactment of this subtitle, or monetary sanctions are
collected after the date of enactment of this subtitle; or
(2) related to a violation for which an award under section
21F of the Securities Exchange Act of 1934, as added by this
subtitle, could have been paid at the time the information
was provided by the whistleblower.
(c) Awards.--A whistleblower may receive an award pursuant
to section 21F of the Securities Exchange Act of 1934, as
added by this subtitle, regardless of whether any violation
of a provision of the securities laws, or a rule or
regulation thereunder, underlying the judicial or
administrative action upon which the award is based, occurred
prior to the date of enactment of this subtitle.

SEC. 925. COLLATERAL BARS.

(a) Securities Exchange Act of 1934.--
(1) Section 15.--Section 15(b)(6)(A) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o(b)(6)(A)) is amended by
striking ``12 months, or bar such person from being
associated with a broker or dealer,'' and inserting ``12
months, or bar any such person from being associated with a
broker, dealer, investment adviser, municipal securities
dealer, municipal advisor, transfer agent, or nationally
recognized statistical rating organization,''.
(2) Section 15b.--Section 15B(c)(4) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-4(c)(4)) is amended by
striking ``twelve months or bar any such person from being
associated with a municipal securities dealer,'' and
inserting ``12 months or bar any such person from being
associated with a broker, dealer, investment adviser,
municipal securities dealer, municipal advisor, transfer
agent, or nationally recognized statistical rating
organization,''.
(3) Section 17a.--Section 17A(c)(4)(C) of the Securities
Exchange Act of 1934 (15 U.S.C. 78q-1(c)(4)(C)) is amended by
striking ``twelve months or bar any such person from being
associated with the transfer agent,'' and inserting ``12
months or bar any such person from being associated with any
transfer agent, broker, dealer, investment adviser, municipal
securities dealer, municipal advisor, or nationally
recognized statistical rating organization,''.
(b) Investment Advisers Act of 1940.--Section 203(f) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-3(f)) is
amended by striking ``twelve months or bar any such person
from being associated with an investment adviser,'' and
inserting ``12 months or bar any such person from being
associated with an investment adviser, broker, dealer,
municipal securities dealer, municipal advisor, transfer
agent, or nationally recognized statistical rating
organization,''.

SEC. 926. AUTHORITY OF STATE REGULATORS OVER REGULATION D
OFFERINGS.

Section 18(b)(4) of the Securities Act of 1933 (15 U.S.C.
77r(b)(4)) is amended--
(1) by striking ``A security'' and inserting ``(A) In
general--A security'';
(2) by redesignating subparagraphs (A) through (D) as
clauses (i) through (iv), respectively, and adjusting the
margins accordingly; and
(3) by striking clause (iv), as so redesignated, and
inserting the following:
``(iv) Commission rules or regulations issued under section
4(2), except that the Commission may designate, by rule, a
class of securities that it deems not to be covered
securities because the offering of such securities is not of
sufficient size or scope.
``(v) Not later than 360 days after the date of enactment
of the Restoring American Financial Stability Act of 2010,
the Commission shall conduct a rulemaking to determine
whether to designate a class of securities because the
offering of such securities is not of sufficient size or
scope.
``(B) Designation of non-covered securities.--In making a
designation under subparagraph (A)(iv), the Commission shall
consider--
``(i) the size of the offering;
``(ii) the number of States in which the security is being
offered; and
``(iii) the nature of the persons to whom the security is
being offered.
``(C) Review of filings.--
``(i) In general.--The Commission shall review any filings
made relating to any security issued under Commission rules
or regulations under section 4(2), other than one designated
as a non-covered security under subparagraph (A)(iv), not
later than 120 days of the filing with the Commission.
``(ii) Failure to review within 120 days.--If the
Commission fails to review a filing required under clause
(i), the security shall no longer be a covered security,
except that--

``(I) the failure of the Commission to review a filing
shall not result in the loss of status as a covered security
if the Commission, not later than 120 days of the filing with
the Commission, has determined that there has been a good
faith and reasonable attempt by the issuer to comply with all
applicable terms, conditions, and requirements of the filing;
and
``(II) upon review of the filing, if the Commission, not
later than 120 days of the filing with the Commission,
determines that any failure to comply with the applicable
filing terms, conditions, and requirements is insignificant
to the offering as a whole.

``(D) Effect on state filing requirements.--
``(i) In general.--Nothing in subparagraph (A)(iv), (B), or
(C) shall be construed to prohibit a State from imposing
notice filing requirements that are substantially similar to
filing requirements required by rule or regulation under
section 4(4) that were in effect on September 1, 1996.
``(ii) Notification.--Not later than 180 days after the
date of enactment of the Restoring American Financial
Stability Act of 2010, the Commission shall implement
procedures, after consultation with the States, to promptly
notify States upon completion of review of securities
offerings described in subparagraph (A)(iv) by the
Commission.
``(E) Offerings affected.--The requirements of this section
shall apply to offerings filed on or after the date of
enactment of the Restoring Financial Stability Act of
2010.''.

SEC. 927. EQUAL TREATMENT OF SELF-REGULATORY ORGANIZATION
RULES.

Section 29(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78cc(a)) is amended by striking ``an exchange required
thereby'' and inserting ``a self-regulatory organization,''.

SEC. 928. CLARIFICATION THAT SECTION 205 OF THE INVESTMENT
ADVISERS ACT OF 1940 DOES NOT APPLY TO STATE-
REGISTERED ADVISERS.

Section 205(a) of the Investment Advisers Act of 1940 (15
U.S.C. 80b-5(a)) is amended, in the matter preceding
paragraph (1)--
(1) by striking ``, unless exempt from registration
pursuant to section 203(b),'' and inserting ``registered or
required to be registered with the Commission'';
(2) by striking ``make use of the mails or any means or
instrumentality of interstate commerce, directly or
indirectly, to''; and
(3) by striking ``to'' after ``in any way''.

SEC. 929. UNLAWFUL MARGIN LENDING.

Section 7(c)(1)(A) of the Securities Exchange Act of 1934
(15 U.S.C. 78g(c)(1)(A)) is amended by striking ``; and'' and
inserting ``; or''.

SEC. 929A. PROTECTION FOR EMPLOYEES OF SUBSIDIARIES AND
AFFILIATES OF PUBLICLY TRADED COMPANIES.

Section 1514A of title 18, United States Code, is amended
by inserting ``including any subsidiary or affiliate whose
financial information is included in the consolidated
financial statements of such company'' after ``the Securities
Exchange Act of 1934 (15 U.S.C. 78o(d))''.

SEC. 929B. FAIR FUND AMENDMENTS.

Section 308 of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7246(a)) is amended--
(1) by striking subsection (a) and inserting the following:

[[Page S2917]]

``(a) Civil Penalties To Be Used for the Relief of
Victims.--If, in any judicial or administrative action
brought by the Commission under the securities laws, the
Commission obtains a civil penalty against any person for a
violation of such laws, or such person agrees, in settlement
of any such action, to such civil penalty, the amount of such
civil penalty shall, on the motion or at the direction of the
Commission, be added to and become part of a disgorgement
fund or other fund established for the benefit of the victims
of such violation.'';
(2) in subsection (b)--
(A) by striking ``for a disgorgement fund described in
subsection (a)'' and inserting ``for a disgorgement fund or
other fund described in subsection (a)''; and
(B) by striking ``in the disgorgement fund'' and inserting
``in such fund''; and
(3) by striking subsection (e).

SEC. 929C. INCREASING THE BORROWING LIMIT ON TREASURY LOANS.

Section 4(h) of the Securities Investor Protection Act of
1970 (15 U.S.C. 78ddd(h)) is amended in the first sentence,
by striking ``$1,000,000,000'' and inserting
``$2,500,000,000''.

Subtitle C--Improvements to the Regulation of Credit Rating Agencies

SEC. 931. FINDINGS.

Congress finds the following:
(1) Because of the systemic importance of credit ratings
and the reliance placed on credit ratings by individual and
institutional investors and financial regulators, the
activities and performances of credit rating agencies,
including nationally recognized statistical rating
organizations, are matters of national public interest, as
credit rating agencies are central to capital formation,
investor confidence, and the efficient performance of the
United States economy.
(2) Credit rating agencies, including nationally recognized
statistical rating organizations, play a critical
``gatekeeper'' role in the debt market that is functionally
similar to that of securities analysts, who evaluate the
quality of securities in the equity market, and auditors, who
review the financial statements of firms. Such role justifies
a similar level of public oversight and accountability.
(3) Because credit rating agencies perform evaluative and
analytical services on behalf of clients, much as other
financial ``gatekeepers'' do, the activities of credit rating
agencies are fundamentally commercial in character and should
be subject to the same standards of liability and oversight
as apply to auditors, securities analysts, and investment
bankers.
(4) In certain activities, particularly in advising
arrangers of structured financial products on potential
ratings of such products, credit rating agencies face
conflicts of interest that need to be carefully monitored and
that therefore should be addressed explicitly in legislation
in order to give clearer authority to the Securities and
Exchange Commission.
(5) In the recent financial crisis, the ratings on
structured financial products have proven to be inaccurate.
This inaccuracy contributed significantly to the
mismanagement of risks by financial institutions and
investors, which in turn adversely impacted the health of the
economy in the United States and around the world. Such
inaccuracy necessitates increased accountability on the part
of credit rating agencies.

SEC. 932. ENHANCED REGULATION, ACCOUNTABILITY, AND
TRANSPARENCY OF NATIONALLY RECOGNIZED
STATISTICAL RATING ORGANIZATIONS.

Section 15E of the Securities Exchange Act of 1934 (15
U.S.C. 78o-7) is amended--
(1) in subsection (c)--
(A) in paragraph (2)--
(i) in the second sentence, by inserting ``any other
provision of this section, or'' after ``Notwithstanding'';
and
(ii) by inserting after the period at the end the
following: ``Nothing in this paragraph may be construed to
afford a defense against any action or proceeding brought by
the Commission to enforce the antifraud provisions of the
securities laws.''; and
(B) by adding at the end the following:
``(3) Internal controls over processes for determining
credit ratings.--
``(A) In general.--Each nationally recognized statistical
rating organization shall establish, maintain, enforce, and
document an effective internal control structure governing
the implementation of and adherence to policies, procedures,
and methodologies for determining credit ratings, taking into
consideration such factors as the Commission may prescribe,
by rule.
``(B) Attestation requirement.--The Commission shall
prescribe rules requiring each nationally recognized
statistical rating organization to submit to the Commission
an annual internal controls report, which shall contain--
``(i) a description of the responsibility of the management
of the nationally recognized statistical rating organization
in establishing and maintaining an effective internal control
structure under subparagraph (A);
``(ii) an assessment of the effectiveness of the internal
control structure of the nationally recognized statistical
rating organization; and
``(iii) the attestation of the chief executive officer, or
equivalent individual, of the nationally recognized
statistical rating organization.'';
(2) in subsection (d)--
(A) in the subsection heading, by inserting ``Fine,'' after
``Censure,'';
(B) by inserting ``fine,'' after ``censure,'' each place
that term appears;
(C) in paragraph (2), by redesignating subparagraphs (A)
and (B) as clauses (i) and (ii), respectively, and adjusting
the clause margins accordingly;
(D) by redesignating paragraphs (1) through (5) as
subparagraphs (A) through (E), respectively, and adjusting
the subparagraph margins accordingly;
(E) in the matter preceding subparagraph (A), as so
redesignated, by striking ``The Commission'' and inserting
the following:
``(1) In general.--The Commission'';
(F) in subparagraph (D), as so redesignated, by striking
``or'' at the end;
(G) in subparagraph (E), as so redesignated, by striking
the period at the end and inserting a semicolon; and
(H) by adding at the end the following:
``(F) has failed reasonably to supervise, with a view to
preventing a violation of the securities laws, an individual
who commits such a violation, if the individual is subject to
the supervision of that person.
``(2) Suspension or revocation for particular class of
securities.--
``(A) In general.--The Commission may temporarily suspend
or permanently revoke the registration of a nationally
recognized statistical rating organization with respect to a
particular class or subclass of securities, if the Commission
finds, on the record after notice and opportunity for
hearing, that the nationally recognized statistical rating
organization does not have adequate financial and managerial
resources to consistently produce credit ratings with
integrity.
``(B) Considerations.--In making any determination under
subparagraph (A), the Commission shall consider--
``(i) whether the nationally recognized statistical rating
organization has failed over a sustained period of time, as
determined by the Commission, to produce ratings that are
accurate for that class or subclass of securities; and
``(ii) such other factors as the Commission may
determine.'';
(3) in subsection (h), by adding at the end the following:
``(3) Separation of ratings from sales and marketing.--
``(A) Rules required.--The Commission shall issue rules to
prevent the sales and marketing considerations of a
nationally recognized statistical rating organization from
influencing the production of ratings by the nationally
recognized statistical rating organization.
``(B) Contents of rules.--The rules issued under
subparagraph (A) shall provide for--
``(i) exceptions for small nationally recognized
statistical rating organizations with respect to which the
Commission determines that the separation of the production
of ratings and sales and marketing activities is not
appropriate; and
``(ii) suspension or revocation of the registration of a
nationally recognized statistical rating organization, if the
Commission finds, on the record, after notice and opportunity
for a hearing, that--

``(I) the nationally recognized statistical rating
organization has committed a violation of a rule issued under
this subsection; and
``(II) the violation of a rule issued under this subsection
affected a rating.'';

(4) in subsection (j)--
(A) by striking ``Each'' and inserting the following:
``(1) In general.--Each''; and
(B) by adding at the end the following:
``(2) Limitations.--
``(A) In general.--Except as provided in subparagraph (B),
an individual designated under paragraph (1) may not, while
serving in the designated capacity--
``(i) perform credit ratings;
``(ii) participate in the development of ratings
methodologies or models;
``(iii) perform marketing or sales functions; or
``(iv) participate in establishing compensation levels,
other than for employees working for that individual.
``(B) Exception.--The Commission may exempt a small
nationally recognized statistical rating organization from
the limitations under this paragraph, if the Commission finds
that compliance with such limitations would impose an
unreasonable burden on the nationally recognized statistical
rating organization.
``(3) Other duties.--Each individual designated under
paragraph (1) shall establish procedures for the receipt,
retention, and treatment of--
``(A) complaints regarding credit ratings, models,
methodologies, and compliance with the securities laws and
the policies and procedures developed under this section; and
``(B) confidential, anonymous complaints by employees or
users of credit ratings.
``(4) Annual reports required.--
``(A) Annual reports required.--Each individual designated
under paragraph (1) shall submit to the nationally recognized
statistical rating organization an annual report on the
compliance of the nationally recognized statistical rating
organization with the securities laws and the policies and
procedures of the nationally recognized statistical rating
organization that includes--
``(i) a description of any material changes to the code of
ethics and conflict of interest policies of the nationally
recognized statistical rating organization; and
``(ii) a certification that the report is accurate and
complete.

[[Page S2918]]

``(B) Submission of reports to the commission.--Each
nationally recognized statistical rating organization shall
file the reports required under subparagraph (A) together
with the financial report that is required to be submitted to
the Commission under this section.''; and
(5) by striking subsection (p) and inserting the following:
``(p) Regulation of Nationally Recognized Statistical
Rating Organizations.--
``(1) Establishment of office of credit ratings.--
``(A) Office established.--The Commission shall establish
within the Commission an Office of Credit Ratings (referred
to in this subsection as the `Office') to administer the
rules of the Commission--
``(i) with respect to the practices of nationally
recognized statistical rating organizations in determining
ratings, for the protection of users of credit ratings and in
the public interest;
``(ii) to promote accuracy in credit ratings issued by
nationally recognized statistical rating organizations; and
``(iii) to ensure that such ratings are not unduly
influenced by conflicts of interest.
``(B) Director of the office.--The head of the Office shall
be the Director, who shall report to the Chairman.
``(2) Staffing.--The Office established under this
subsection shall be staffed sufficiently to carry out fully
the requirements of this section. The staff shall include
persons with knowledge of and expertise in corporate,
municipal, and structured debt finance.
``(3) Commission examinations.--
``(A) Annual examinations required.--The Office shall
conduct an examination of each nationally recognized
statistical rating organization at least annually.
``(B) Conduct of examinations.--Each examination under
subparagraph (A) shall include a review of--
``(i) whether the nationally recognized statistical rating
organization conducts business in accordance with the
policies, procedures, and rating methodologies of the
nationally recognized statistical rating organization;
``(ii) the management of conflicts of interest by the
nationally recognized statistical rating organization;
``(iii) implementation of ethics policies by the nationally
recognized statistical rating organization;
``(iv) the internal supervisory controls of the nationally
recognized statistical rating organization;
``(v) the governance of the nationally recognized
statistical rating organization;
``(vi) the activities of the individual designated by the
nationally recognized statistical rating organization under
subsection (j)(1);
``(vii) the processing of complaints by the nationally
recognized statistical rating organization; and
``(viii) the policies of the nationally recognized
statistical rating organization governing the post-employment
activities of former staff of the nationally recognized
statistical rating organization.
``(C) Inspection reports.--The Commission shall make
available to the public, in an easily understandable format,
an annual report summarizing--
``(i) the essential findings of all examinations conducted
under subparagraph (A), as deemed appropriate by the
Commission;
``(ii) the responses by the nationally recognized
statistical rating organizations to any material regulatory
deficiencies identified by the Commission under clause (i);
and
``(iii) whether the nationally recognized statistical
rating organizations have appropriately addressed the
recommendations of the Commission contained in previous
reports under this subparagraph.
``(4) Rulemaking authority.--The Commission shall--
``(A) establish, by rule, fines, and other penalties
applicable to any nationally recognized statistical rating
organization that violates the requirements of this
subsection and the rules thereunder; and
``(B) issue such rules as may be necessary to carry out
this subsection.
``(q) Transparency of Ratings Performance.--
``(1) Rulemaking required.--The Commission shall, by rule,
require that each nationally recognized statistical rating
organization publicly disclose information on the initial
credit ratings determined by the nationally recognized
statistical rating organization for each type of obligor,
security, and money market instrument, and any subsequent
changes to such credit ratings, for the purpose of allowing
users of credit ratings to evaluate the accuracy of ratings
and compare the performance of ratings by different
nationally recognized statistical rating organizations.
``(2) Content.--The rules of the Commission under this
subsection shall require, at a minimum, disclosures that--
``(A) are comparable among nationally recognized
statistical rating organizations, to allow users of credit
ratings to compare the performance of credit ratings across
nationally recognized statistical rating organizations;
``(B) are clear and informative for investors who use or
might use credit ratings;
``(C) include performance information over a range of years
and for a variety of types of credit ratings, including for
credit ratings withdrawn by the nationally recognized
statistical rating organization;
``(D) are published and made freely available by the
nationally recognized statistical rating organization, on an
easily accessible portion of its website, and in writing,
when requested; and
``(E) are appropriate to the business model of a nationally
recognized statistical rating organization.
``(r) Credit Ratings Methodologies.--The Commission shall
prescribe rules, for the protection of investors and in the
public interest, with respect to the procedures and
methodologies, including qualitative and quantitative data
and models, used by nationally recognized statistical rating
organizations that require each nationally recognized
statistical rating organization--
``(1) to ensure that credit ratings are determined using
procedures and methodologies, including qualitative and
quantitative data and models, that are--
``(A) approved by the board of the nationally recognized
statistical rating organization, a body performing a function
similar to that of a board, or the senior credit officer of
the nationally recognized statistical rating organization;
and
``(B) in accordance with the policies and procedures of the
nationally recognized statistical rating organization for the
development and modification of credit rating procedures and
methodologies;
``(2) to ensure that when material changes to credit rating
procedures and methodologies (including changes to
qualitative and quantitative data and models) are made,
that--
``(A) the changes are applied consistently to all credit
ratings to which the changed procedures and methodologies
apply;
``(B) to the extent that changes are made to credit rating
surveillance procedures and methodologies, the changes are
applied to then-current credit ratings by the nationally
recognized statistical rating organization within a
reasonable time period determined by the Commission, by rule;
and
``(C) the nationally recognized statistical rating
organization publicly discloses the reason for the change;
and
``(3) to notify users of credit ratings--
``(A) of the version of a procedure or methodology,
including the qualitative methodology or quantitative inputs,
used with respect to a particular credit rating;
``(B) when a material change is made to a procedure or
methodology, including to a qualitative model or quantitative
inputs;
``(C) when a significant error is identified in a procedure
or methodology, including a qualitative or quantitative
model, that may result in credit rating actions; and
``(D) of the likelihood of a material change described in
subparagraph (B) resulting in a change in current credit
ratings.
``(s) Transparency of Credit Rating Methodologies and
Information Reviewed.--
``(1) Form for disclosures.--The Commission shall require,
by rule, each nationally recognized statistical rating
organization to prescribe a form to accompany the publication
of each credit rating that discloses--
``(A) information relating to--
``(i) the assumptions underlying the credit rating
procedures and methodologies;
``(ii) the data that was relied on to determine the credit
rating; and
``(iii) if applicable, how the nationally recognized
statistical rating organization used servicer or remittance
reports, and with what frequency, to conduct surveillance of
the credit rating; and
``(B) information that can be used by investors and other
users of credit ratings to better understand credit ratings
in each class of credit rating issued by the nationally
recognized statistical rating organization.
``(2) Format.--The form developed under paragraph (1)
shall--
``(A) be easy to use and helpful for users of credit
ratings to understand the information contained in the
report;
``(B) require the nationally recognized statistical rating
organization to provide the content described in paragraph
(3)(B) in a manner that is directly comparable across types
of securities; and
``(C) be made readily available to users of credit ratings,
in electronic or paper form, as the Commission may, by rule,
determine.
``(3) Content of form.--
``(A) Qualitative content.--Each nationally recognized
statistical rating organization shall disclose on the form
developed under paragraph (1)--
``(i) the credit ratings produced by the nationally
recognized statistical rating organization;
``(ii) the main assumptions and principles used in
constructing procedures and methodologies, including
qualitative methodologies and quantitative inputs and
assumptions about the correlation of defaults across obligors
used in rating structured products;
``(iii) the potential limitations of the credit ratings,
and the types of risks excluded from the credit ratings that
the nationally recognized statistical rating organization
does not comment on, including liquidity, market, and other
risks;
``(iv) information on the uncertainty of the credit rating,
including--

``(I) information on the reliability, accuracy, and quality
of the data relied on in determining the credit rating; and
``(II) a statement relating to the extent to which data
essential to the determination of the credit rating were
reliable or limited, including--

``(aa) any limits on the scope of historical data; and

[[Page S2919]]

``(bb) any limits in accessibility to certain documents or
other types of information that would have better informed
the credit rating;
``(v) whether and to what extent third party due diligence
services have been used by the nationally recognized
statistical rating organization, a description of the
information that such third party reviewed in conducting due
diligence services, and a description of the findings or
conclusions of such third party;
``(vi) a description of the data about any obligor, issuer,
security, or money market instrument that were relied upon
for the purpose of determining the credit rating;
``(vii) a statement containing an overall assessment of the
quality of information available and considered in producing
a rating for an obligor, security, or money market
instrument, in relation to the quality of information
available to the nationally recognized statistical rating
organization in rating similar issuances;
``(viii) information relating to conflicts of interest of
the nationally recognized statistical rating organization;
and
``(ix) such additional information as the Commission may
require.
``(B) Quantitative content.--Each nationally recognized
statistical rating organization shall disclose on the form
developed under this subsection--
``(i) an explanation or measure of the potential volatility
of the credit rating, including--

``(I) any factors that might lead to a change in the credit
ratings; and
``(II) the magnitude of the change that a user can expect
under different market conditions;

``(ii) information on the content of the rating,
including--

``(I) the historical performance of the rating; and
``(II) the expected probability of default and the expected
loss in the event of default;

``(iii) information on the sensitivity of the rating to
assumptions made by the nationally recognized statistical
rating organization; and
``(iv) such additional information as may be required by
the Commission.
``(4) Due diligence services for asset-backed securities.--
``(A) Findings.--The issuer or underwriter of any asset-
backed security shall make publicly available the findings
and conclusions of any third-party due diligence report
obtained by the issuer or underwriter.
``(B) Certification required.--In any case in which third-
party due diligence services are employed by a nationally
recognized statistical rating organization, an issuer, or an
underwriter, the person providing the due diligence services
shall provide to any nationally recognized statistical rating
organization that produces a rating to which such services
relate, written certification, as provided in subparagraph
(C).
``(C) Format and content.--The Commission shall establish
the appropriate format and content for the written
certifications required under subparagraph (B), to ensure
that providers of due diligence services have conducted a
thorough review of data, documentation, and other relevant
information necessary for a nationally recognized statistical
rating organization to provide an accurate rating.
``(D) Disclosure of certification.--The Commission shall
adopt rules requiring a nationally recognized statistical
rating organization, at the time at which the nationally
recognized statistical rating organization produces a rating,
to disclose the certification described in subparagraph (B)
to the public in a manner that allows the public to determine
the adequacy and level of due diligence services provided by
a third party.
``(t) Corporate Governance, Organization, and Management of
Conflicts of Interest.--
``(1) Board of directors.--Each nationally recognized
statistical rating organization shall have a board of
directors.
``(2) Independent directors.--
``(A) In general.--At least \1/2\ of the board of
directors, but not fewer than 2 of the members thereof, shall
be independent of the nationally recognized statistical
rating agency. A portion of the independent directors shall
include users of ratings from a nationally recognized
statistical rating organization.
``(B) Independence determination.--In order to be
considered independent for purposes of this subsection, a
member of the board of directors of a nationally recognized
statistical rating organization--
``(i) may not, other than in his or her capacity as a
member of the board of directors or any committee thereof--

``(I) accept any consulting, advisory, or other
compensatory fee from the nationally recognized statistical
rating organization; or
``(II) be a person associated with the nationally
recognized statistical rating organization or with any
affiliated company thereof; and

``(ii) shall be disqualified from any deliberation
involving a specific rating in which the independent board
member has a financial interest in the outcome of the rating.
``(C) Compensation and term.--The compensation of the
independent members of the board of directors of a nationally
recognized statistical rating organization shall not be
linked to the business performance of the nationally
recognized statistical rating organization, and shall be
arranged so as to ensure the independence of their judgment.
The term of office of the independent directors shall be for
a pre-agreed fixed period, not to exceed 5 years, and shall
not be renewable.
``(3) Duties of board of directors.--In addition to the
overall responsibilities of the board of directors, the board
shall oversee--
``(A) the establishment, maintenance, and enforcement of
policies and procedures for determining credit ratings;
``(B) the establishment, maintenance, and enforcement of
policies and procedures to address, manage, and disclose any
conflicts of interest;
``(C) the effectiveness of the internal control system with
respect to policies and procedures for determining credit
ratings; and
``(D) the compensation and promotion policies and practices
of the nationally recognized statistical rating organization.
``(4) Treatment of nrsro subsidiaries.--If a nationally
recognized statistical rating organization is a subsidiary of
a parent entity, the board of the directors of the parent
entity may satisfy the requirements of this subsection by
assigning to a committee of such board of directors the
duties under paragraph (3), if--
``(A) at least \1/2\ of the members of the committee
(including the chairperson of the committee) are independent,
as defined in this section; and
``(B) at least 1 member of the committee is a user of
ratings from a nationally recognized statistical rating
organization.
``(5) Exception authority.--If the Commission finds that
compliance with the provisions of this subsection present an
unreasonable burden on a small nationally recognized
statistical rating organization, the Commission may permit
the nationally recognized statistical rating organization to
delegate such responsibilities to a committee that includes
at least one individual who is a user of ratings of a
nationally recognized statistical rating organization.''.

SEC. 933. STATE OF MIND IN PRIVATE ACTIONS.

(a) Accountability.--Section 15E(m) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-7(m)) is amended to read
as follows:
``(m) Accountability.--
``(1) In general.--The enforcement and penalty provisions
of this title shall apply to statements made by a credit
rating agency in the same manner and to the same extent as
such provisions apply to statements made by a registered
public accounting firm or a securities analyst under the
securities laws, and such statements shall not be deemed
forward-looking statements for the purposes of section 21E.
``(2) Rulemaking.--The Commission shall issue such rules as
may be necessary to carry out this subsection.''.
(b) State of Mind.--Section 21D(b)(2) of the Securities
Exchange Act of 1934 (15 U.S.C. 78u-4(b)(2)) is amended--
(1) by striking ``In any'' and inserting the following:
``(A) In general.--Except as provided in subparagraph (B),
in any''; and
(2) by adding at the end the following:
``(B) Exception.--In the case of an action for money
damages brought against a credit rating agency or a
controlling person under this title, it shall be sufficient,
for purposes of pleading any required state of mind in
relation to such action, that the complaint state with
particularity facts giving rise to a strong inference that
the credit rating agency knowingly or recklessly failed--
``(i) to conduct a reasonable investigation of the rated
security with respect to the factual elements relied upon by
its own methodology for evaluating credit risk; or
``(ii) to obtain reasonable verification of such factual
elements (which verification may be based on a sampling
technique that does not amount to an audit) from other
sources that the credit rating agency considered to be
competent and that were independent of the issuer and
underwriter.''.

SEC. 934. REFERRING TIPS TO LAW ENFORCEMENT OR REGULATORY
AUTHORITIES.

Section 15E of the Securities Exchange Act of 1934 (15
U.S.C. 78o-7), as amended by this subtitle, is amended by
adding at the end the following:
``(u) Duty To Report Tips Alleging Material Violations of
Law.--
``(1) Duty to report.--Each nationally recognized
statistical rating organization shall refer to the
appropriate law enforcement or regulatory authorities any
information that the nationally recognized statistical rating
organization receives from a third party and finds credible
that alleges that an issuer of securities rated by the
nationally recognized statistical rating organization has
committed or is committing a material violation of law that
has not been adjudicated by a Federal or State court.
``(2) Rule of construction.--Nothing in paragraph (1) may
be construed to require a nationally recognized statistical
rating organization to verify the accuracy of the information
described in paragraph (1).''.

SEC. 935. CONSIDERATION OF INFORMATION FROM SOURCES OTHER
THAN THE ISSUER IN RATING DECISIONS.

Section 15E of the Securities Exchange Act of 1934 (15
U.S.C. 78o-7), as amended by this subtitle, is amended by
adding at the end the following:
``(v) Information From Sources Other Than the Issuer.--In
producing a credit rating, a nationally recognized
statistical rating organization shall consider information
about an issuer that the nationally recognized statistical
rating organization has, or

[[Page S2920]]

receives from a source other than the issuer, that the
nationally recognized statistical rating organization finds
credible and potentially significant to a rating decision.''.

SEC. 936. QUALIFICATION STANDARDS FOR CREDIT RATING ANALYSTS.

Not later than 1 year after the date of enactment of this
Act, the Commission shall issue rules that are reasonably
designed to ensure that any person employed by a nationally
recognized statistical rating organization to perform credit
ratings--
(1) meets standards of training, experience, and competence
necessary to produce accurate ratings for the categories of
issuers whose securities the person rates; and
(2) is tested for knowledge of the credit rating process.

SEC. 937. TIMING OF REGULATIONS.

Unless otherwise specifically provided in this subtitle,
the Commission shall issue final regulations, as required by
this subtitle and the amendments made by this subtitle, not
later than 1 year after the date of enactment of this Act.

SEC. 938. UNIVERSAL RATINGS SYMBOLS.

(a) Rulemaking.--The Commission shall require, by rule,
each nationally recognized statistical rating organization to
establish, maintain, and enforce written policies and
procedures that--
(1) assess the probability that an issuer of a security or
money market instrument will default, fail to make timely
payments, or otherwise not make payments to investors in
accordance with the terms of the security or money market
instrument;
(2) clearly define and disclose the meaning of any symbol
used by the nationally recognized statistical rating
organization to denote a credit rating; and
(3) apply any symbol described in paragraph (2) in a manner
that is consistent for all types of securities and money
market instruments for which the symbol is used.
(b) Rule of Construction.--Nothing in this section shall
prohibit a nationally recognized statistical rating
organization from using distinct sets of symbols to denote
credit ratings for different types of securities or money
market instruments.

SEC. 939. GOVERNMENT ACCOUNTABILITY OFFICE STUDY AND FEDERAL
AGENCY REVIEW OF REQUIRED USES OF NATIONALLY
RECOGNIZED STATISTICAL RATING ORGANIZATION
RATINGS.

(a) Study.--The Comptroller General of the United States
shall conduct a study of the scope of provisions of Federal
and State laws and regulations with respect to the regulation
of securities markets, banking, insurance, and other areas
that require the use of ratings issued by nationally
recognized statistical rating organizations (in this section
referred to as the ``ratings requirements'').
(b) Subjects for Evaluation; Process of Evaluation.--
(1) Subjects for evaluation.--In conducting the study under
subsection (a), the Comptroller General of the United States
shall evaluate--
(A) the necessity for and purpose of ratings requirements;
(B) which ratings requirements, if any, could be removed
with minimal disruption to the financial markets;
(C) the potential impact on the financial markets and on
investors if the ratings requirements identified under
subparagraph (B) were rescinded; and
(D) whether the financial markets and investors would
benefit from the rescission of such ratings requirements.
(2) Process of evaluation.--In conducting the study under
subsection (a), the Comptroller General of the United States
shall research and take into consideration the views of--
(A) the Federal financial regulatory agencies;
(B) hedge funds;
(C) banks;
(D) brokerage firms;
(E) mutual funds;
(F) pension funds; and
(G) all other interested parties.
(c) Report and Recommendations.--Not later than 2 years
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 of the Senate and the
Committee on Financial Services of the House of
Representatives a report on the results of the study
conducted under subsection (a), including recommendations, if
any, on--
(1) which ratings requirements, if any, could be removed
with minimal disruption to the markets; and
(2) whether the financial markets and investors would
benefit from the rescission of the ratings requirements
identified under paragraph (1).
(d) Federal Agency Review of Ratings Requirements.--
(1) Review.--Each covered Federal agency shall review--
(A) any regulation of the covered Federal agency that
requires the use of an assessment of the credit worthiness of
a security or money market instrument;
(B) any other reference to credit ratings or requirement
relating to credit ratings in a regulation of the covered
Federal agency; and
(C) alternative standards of creditworthiness that are
based on market-generated indicators, including yield
spreads, bond prices, and credit default swap spreads.
(2) Modifications required.--Except as provided in
paragraph (3), each covered Federal agency shall modify any
regulation identified under paragraph (1)--
(A) to remove any reference to credit ratings or a credit
ratings requirement in the regulation; and
(B) to amend the regulation to require the use of a
standard of credit worthiness that--
(i) is not related to credit ratings; and
(ii) the covered Federal agency determines appropriate.
(3) Exception.--A covered Federal agency may elect not to
amend a regulation identified under paragraph (1), if the
covered Federal agency determines that--
(A) there is no reasonable alternative standard of credit
worthiness that could replace a credit rating for purposes of
the regulation; and
(B) an amendment to the regulation would be inconsistent
with the purposes of the statute that authorized the
regulation and not in the public interest.
(4) Report.--Not later than 1 year after the date on which
the Comptroller General submits the report required under
subsection (c), each covered Federal agency shall submit to
Congress a report that contains--
(A) a description of any amendment under paragraph (2); and
(B) an explanation of any determination under paragraph
(3).
(5) Definition.--In this subsection, the term ``covered
Federal agency'' means--
(A) the Commission;
(B) the Corporation;
(C) the Office of the Comptroller of the Currency;
(D) the Board of Governors;
(E) the National Credit Union Administration; and
(F) the Federal Housing Finance Agency.

SEC. 939A. SECURITIES AND EXCHANGE COMMISSION STUDY ON
STRENGTHENING CREDIT RATING AGENCY
INDEPENDENCE.

(a) Study.--The Commission shall conduct a study of--
(1) the independence of nationally recognized statistical
rating organizations; and
(2) how the independence of nationally recognized
statistical rating organizations affects the ratings issued
by the nationally recognized statistical rating
organizations.
(b) Subjects for Evaluation.--In conducting the study under
subsection (a), the Commission shall evaluate--
(1) the management of conflicts of interest raised by a
nationally recognized statistical rating organization
providing other services, including risk management advisory
services, ancillary assistance, or consulting services;
(2) the potential impact of rules prohibiting a nationally
recognized statistical rating organization that provides a
rating to an issuer from providing other services to the
issuer; and
(3) any other issue relating to nationally recognized
statistical rating organizations, as the Chairman of the
Commission determines is appropriate.
(c) Report.--Not later than 3 years after the date of
enactment of this Act, the Chairman of the Commission 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 results of
the study conducted under subsection (a), including
recommendations, if any, for improving the integrity of
ratings issued by nationally recognized statistical rating
organizations.

SEC. 939B. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON
ALTERNATIVE BUSINESS MODELS.

(a) Study.--The Comptroller General of the United States
shall conduct a study on alternative means for compensating
nationally recognized statistical rating organizations in
order to create incentives for nationally recognized
statistical rating organizations to provide more accurate
credit ratings, including any statutory changes that would be
required to facilitate the use of an alternative means of
compensation.
(b) Report.--Not later than 1 year 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 results of the study
conducted under subsection (a), including recommendations, if
any, for providing incentives to credit rating agencies to
improve the credit rating process.

SEC. 939C. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON THE
CREATION OF AN INDEPENDENT PROFESSIONAL ANALYST
ORGANIZATION.

(a) Study.--The Comptroller General of the United States
shall conduct a study on the feasibility and merits of
creating an independent professional organization for rating
analysts employed by nationally recognized statistical rating
organizations that would be responsible for--
(1) establishing independent standards for governing the
profession of rating analysts;
(2) establishing a code of ethical conduct; and
(3) overseeing the profession of rating analysts.
(b) Report.--Not later than 1 year 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 results of the study
conducted under subsection (a).

[[Page S2921]]

Subtitle D--Improvements to the Asset-Backed Securitization Process

SEC. 941. REGULATION OF CREDIT RISK RETENTION.

(a) Definition of Asset-backed Security.--Section 3(a) of
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is
amended by adding at the end the following:
``(77) Asset-backed security.--The term `asset-backed
security'--
``(A) means a fixed-income or other security collateralized
by any type of self-liquidating financial asset (including a
loan, a lease, a mortgage, or a secured or unsecured
receivable) that allows the holder of the security to receive
payments that depend primarily on cash flow from the asset,
including--
``(i) a collateralized mortgage obligation;
``(ii) a collateralized debt obligation;
``(iii) a collateralized bond obligation;
``(iv) a collateralized debt obligation of asset-backed
securities;
``(v) a collateralized debt obligation of collateralized
debt obligations; and
``(vi) a security that the Commission, by rule, determines
to be an asset-backed security for purposes of this section;
and
``(B) does not include a security issued by a finance
subsidiary held by the parent company or a company controlled
by the parent company, if none of the securities issued by
the finance subsidiary are held by an entity that is not
controlled by the parent company.''.
(b) Credit Risk Retention.--The Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.) is amended by inserting after
section 15F, as added by this Act, the following:

``SEC. 15G. CREDIT RISK RETENTION.

``(a) Definitions.--In this section--
``(1) the term `Federal banking agencies' means the Office
of the Comptroller of the Currency and the Federal Deposit
Insurance Corporation;
``(2) the term `insured depository institution' has the
same meaning as in section 3(c) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(c));
``(3) the term `securitizer' means--
``(A) an issuer of an asset-backed security; or
``(B) a person who organizes and initiates an asset-backed
securities transaction by selling or transferring assets,
either directly or indirectly, including through an
affiliate, to the issuer; and
``(4) the term `originator' means a person who--
``(A) through the extension of credit or otherwise, creates
a financial asset that collateralizes an asset-backed
security; and
``(B) sells an asset to a securitizer.
``(b) In General.--Not later than 270 days after the date
of enactment of this section, the Federal banking agencies
and the Commission shall jointly prescribe regulations to
require any securitizer to retain an economic interest in a
portion of the credit risk for any asset that the
securitizer, through the issuance of an asset-backed
security, transfers, sells, or conveys to a third party.
``(c) Standards for Regulations.--
``(1) Standards.--The regulations prescribed under
subsection (b) shall--
``(A) prohibit a securitizer from directly or indirectly
hedging or otherwise transferring the credit risk that the
securitizer is required to retain with respect to an asset;
``(B) require a securitizer to retain--
``(i) not less than 5 percent of the credit risk for any
asset that is transferred, sold, or conveyed through the
issuance of an asset-backed security by the securitizer; or
``(ii) less than 5 percent of the credit risk for an asset
that is transferred, sold, or conveyed through the issuance
of an asset-backed security by the securitizer, if the
originator of the asset meets the underwriting standards
prescribed under paragraph (2)(B);
``(C) specify--
``(i) the permissible forms of risk retention for purposes
of this section; and
``(ii) the minimum duration of the risk retention required
under this section;
``(D) apply, regardless of whether the securitizer is an
insured depository institution; and
``(E) provide for--
``(i) a total or partial exemption of any securitization,
as may be appropriate in the public interest and for the
protection of investors; and
``(ii) the allocation of risk retention obligations between
a securitizer and an originator in the case of a securitizer
that purchases assets from an originator, as the Federal
banking agencies and the Commission jointly determine
appropriate.
``(2) Asset classes.--
``(A) Asset classes.--The regulations prescribed under
subsection (b) shall establish asset classes with separate
rules for securitizers of different classes of assets,
including residential mortgages, commercial mortgages,
commercial loans, auto loans, and any other class of assets
that the Federal banking agencies and the Commission deem
appropriate.
``(B) Contents.--For each asset class established under
subparagraph (A), the regulations prescribed under subsection
(b) shall establish underwriting standards that specify the
terms, conditions, and characteristics of a loan within the
asset class that indicate a reduced credit risk with respect
to the loan.
``(d) Originators.--In determining how to allocate risk
retention obligations between a securitizer and an originator
under subsection (c)(1)(E)(ii), the Federal banking agencies
and the Commission shall--
``(1) reduce the percentage of risk retention obligations
required of the securitizer by the percentage of risk
retention obligations required of the originator; and
``(2) consider--
``(A) whether the assets sold to the securitizer have
terms, conditions, and characteristics that reflect reduced
credit risk;
``(B) whether the form or volume of transactions in
securitization markets creates incentives for imprudent
origination of the type of loan or asset to be sold to the
securitizer; and
``(C) the potential impact of the risk retention
obligations on the access of consumers and businesses to
credit on reasonable terms, which may not include the
transfer of credit risk to a third party.
``(e) Exemptions, Exceptions, and Adjustments.--
``(1) In general.--The Federal banking agencies and the
Commission may jointly adopt or issue exemptions, exceptions,
or adjustments to the rules issued under this section,
including exemptions, exceptions, or adjustments for classes
of institutions or assets relating to the risk retention
requirement and the prohibition on hedging under subsection
(c)(1).
``(2) Applicable standards.--Any exemption, exception, or
adjustment adopted or issued by the Federal banking agencies
and the Commission under this paragraph shall--
``(A) help ensure high quality underwriting standards for
the securitizers and originators of assets that are
securitized or available for securitization; and
``(B) encourage appropriate risk management practices by
the securitizers and originators of assets, improve the
access of consumers and businesses to credit on reasonable
terms, or otherwise be in the public interest and for the
protection of investors.
``(3) Farm credit system institutions.--A Farm Credit
System institution, including the Federal Agricultural
Mortgage Corporation, that is chartered and subject to the
provisions of the Farm Credit Act of 1971, as amended (12
U.S.C. 2001 et seq.), shall be exempt from the risk retention
provisions of this subsection.
``(f) Enforcement.--The regulations issued under this
section shall be enforced by--
``(1) the appropriate Federal banking agency, with respect
to any securitizer that is an insured depository institution;
and
``(2) the Commission, with respect to any securitizer that
is not an insured depository institution.
``(g) Authority of Commission.--The authority of the
Commission under this section shall be in addition to the
authority of the Commission to otherwise enforce the
securities laws.
``(h) Effective Date of Regulations.--The regulations
issued under this section shall become effective--
``(1) with respect to securitizers and originators of
asset-backed securities backed by residential mortgages, 1
year after the date on which final rules under this section
are published in the Federal Register; and
``(2) with respect to securitizers and originators of all
other classes of asset-backed securities, 2 years after the
date on which final rules under this section are published in
the Federal Register.''.

SEC. 942. DISCLOSURES AND REPORTING FOR ASSET-BACKED
SECURITIES.

(a) Securities Exchange Act of 1934.--Section 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(d)) is
amended--
(1) by striking ``(d) Each'' and inserting the following:
``(d) Supplementary and Periodic Information.--
``(1) In general.--Each'';
(2) in the third sentence, by inserting after ``securities
of each class'' the following: ``, other than any class of
asset-backed securities,''; and
(3) by adding at the end the following:
``(2) Asset-backed securities.--
``(A) Suspension of duty to file.--The Commission may, by
rule or regulation, provide for the suspension or termination
of the duty to file under this subsection for any class of
asset-backed security, on such terms and conditions and for
such period or periods as the Commission deems necessary or
appropriate in the public interest or for the protection of
investors.
``(B) Classification of issuers.--The Commission may, for
purposes of this subsection, classify issuers and prescribe
requirements appropriate for each class of issuers of asset-
backed securities.''.
(b) Securities Act of 1933.--Section 7 of the Securities
Act of 1933 (15 U.S.C. 77g) is amended by adding at the end
the following:
``(c) Disclosure Requirements.--
``(1) In general.--The Commission shall adopt regulations
under this subsection requiring each issuer of an asset-
backed security to disclose, for each tranche or class of
security, information regarding the assets backing that
security.
``(2) Content of regulations.--In adopting regulations
under this subsection, the Commission shall--
``(A) set standards for the format of the data provided by
issuers of an asset-backed security, which shall, to the
extent feasible, facilitate comparison of such data across
securities in similar types of asset classes; and
``(B) require issuers of asset-backed securities, at a
minimum, to disclose asset-level or loan-level data necessary
for investors to independently perform due diligence,
including--

[[Page S2922]]

``(i) data having unique identifiers relating to loan
brokers or originators;
``(ii) the nature and extent of the compensation of the
broker or originator of the assets backing the security; and
``(iii) the amount of risk retention by the originator and
the securitizer of such assets.''.

SEC. 943. REPRESENTATIONS AND WARRANTIES IN ASSET-BACKED
OFFERINGS.

Not later than 180 days after the date of enactment of this
Act, the Securities and Exchange Commission shall prescribe
regulations on the use of representations and warranties in
the market for asset-backed securities (as that term is
defined in section 3(a)(77) of the Securities Exchange Act of
1934, as added by this subtitle) that--
(1) require each national recognized statistical rating
organization to include in any report accompanying a credit
rating a description of--
(A) the representations, warranties, and enforcement
mechanisms available to investors; and
(B) how they differ from the representations, warranties,
and enforcement mechanisms in issuances of similar
securities; and
(2) require any securitizer (as that term is defined in
section 15G(a) of the Securities Exchange Act of 1934, as
added by this subtitle) to disclose fulfilled and unfulfilled
repurchase requests across all trusts aggregated by the
securitizer, so that investors may identify asset originators
with clear underwriting deficiencies.

SEC. 944. EXEMPTED TRANSACTIONS UNDER THE SECURITIES ACT OF
1933.

(a) Exemption Eliminated.--Section 4 of the Securities Act
of 1933 (15 U.S.C. 77d) is amended--
(1) by striking paragraph (5); and
(2) by striking ``(6) transactions'' and inserting the
following:
``(5) transactions''.
(b) Conforming Amendment.--Section 3(a)(4)(B)(vii)(I) of
the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)(4)(B)(vii)(I)) is amended by striking ``4(6)'' and
inserting ``4(5)''.

SEC. 945. DUE DILIGENCE ANALYSIS AND DISCLOSURE IN ASSET-
BACKED SECURITIES ISSUES.

Section 7 of the Securities Act of 1933 (15 U.S.C. 77g), as
amended by this subtitle, is amended by adding at the end the
following:
``(d) Registration Statement for Asset-backed Securities.--
Not later than 180 days after the date of enactment of this
subsection, the Commission shall issue rules relating to the
registration statement required to be filed by any issuer of
an asset-backed security (as that term is defined in section
3(a)(77) of the Securities Exchange Act of 1934) that require
any issuer of an asset-backed security--
``(1) to perform a due diligence analysis of the assets
underlying the asset-backed security; and
``(2) to disclose the nature of the analysis under
paragraph (1).''.

Subtitle E--Accountability and Executive Compensation

SEC. 951. SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION
DISCLOSURES.

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended by inserting after section 14 (15 U.S.C. 78n) the
following:

``SEC. 14A. ANNUAL SHAREHOLDER APPROVAL OF EXECUTIVE
COMPENSATION.

``(a) Separate Resolution Required.--Any proxy or consent
or authorization for an annual or other meeting of the
shareholders occurring after the end of the 6-month period
beginning on the date of enactment of this section, for which
the proxy solicitation rules of the Commission require
compensation disclosure, shall include a separate resolution
subject to shareholder vote to approve the compensation of
executives, as disclosed pursuant to section 229.402 of title
17, Code of Federal Regulations, or any successor thereto.
``(b) Rule of Construction.--The shareholder vote referred
to in subsection (a) shall not be binding on the issuer or
the board of directors of an issuer, and may not be
construed--
``(1) as overruling a decision by such issuer or board of
directors;
``(2) to create or imply any change to the fiduciary duties
of such issuer or board of directors;
``(3) to create or imply any additional fiduciary duties
for such issuer or board of directors; or
``(4) to restrict or limit the ability of shareholders to
make proposals for inclusion in proxy materials related to
executive compensation.''.

SEC. 952. COMPENSATION COMMITTEE INDEPENDENCE.

The Securities Exchange Act of 1934 (15 U.S.C. 78 et seq.)
is amended by inserting after section 10B, as added by
section 753, the following:

``SEC. 10C. COMPENSATION COMMITTEES.

``(a) Independence of Compensation Committees.--
``(1) Listing standards.--The Commission shall, by rule,
direct the national securities exchanges and national
securities associations to prohibit the listing of any
security of an issuer that does not comply with the
requirements of this subsection.
``(2) Independence of compensation committees.--The rules
of the Commission under paragraph (1) shall require that each
member of the compensation committee of the board of
directors of an issuer be--
``(A) a member of the board of directors of the issuer; and
``(B) independent.
``(3) Independence.--The rules of the Commission under
paragraph (1) shall require that, in determining the
definition of the term `independence' for purposes of
paragraph (2), the national securities exchanges and the
national securities associations shall consider relevant
factors, including--
``(A) the source of compensation of a member of the board
of directors of an issuer, including any consulting,
advisory, or other compensatory fee paid by the issuer to
such member of the board of directors; and
``(B) whether a member of the board of directors of an
issuer is affiliated with the issuer, a subsidiary of the
issuer, or an affiliate of a subsidiary of the issuer.
``(4) Exemption authority.--The rules of the Commission
under paragraph (1) shall permit a national securities
exchange or a national securities association to exempt a
particular relationship from the requirements of paragraph
(2), with respect to the members of a compensation committee,
as the national securities exchange or national securities
association determines is appropriate, taking into
consideration the size of an issuer and any other relevant
factors.
``(b) Independence of Compensation Consultants and Other
Compensation Committee Advisers.--
``(1) In general.--The compensation committee of an issuer
may only select a compensation consultant, legal counsel, or
other adviser to the compensation committee after taking into
consideration the factors identified by the Commission under
paragraph (2).
``(2) Rules.--The Commission shall identify factors that
affect the independence of a compensation consultant, legal
counsel, or other adviser to a compensation committee of an
issuer, including--
``(A) the provision of other services to the issuer by the
person that employs the compensation consultant, legal
counsel, or other adviser;
``(B) the amount of fees received from the issuer by the
person that employs the compensation consultant, legal
counsel, or other adviser, as a percentage of the total
revenue of the person that employs the compensation
consultant, legal counsel, or other adviser;
``(C) the policies and procedures of the person that
employs the compensation consultant, legal counsel, or other
adviser that are designed to prevent conflicts of interest;
``(D) any business or personal relationship of the
compensation consultant, legal counsel, or other adviser with
a member of the compensation committee; and
``(E) any stock of the issuer owned by the compensation
consultant, legal counsel, or other adviser.
``(c) Compensation Committee Authority Relating to
Compensation Consultants.--
``(1) Authority to retain compensation consultant.--
``(A) In general.--The compensation committee of an issuer,
in its capacity as a committee of the board of directors,
may, in its sole discretion, retain or obtain the advice of a
compensation consultant.
``(B) Direct responsibility of compensation committee.--The
compensation committee of an issuer shall be directly
responsible for the appointment, compensation, and oversight
of the work of a compensation consultant.
``(C) Rule of construction.--This paragraph may not be
construed--
``(i) to require the compensation committee to implement or
act consistently with the advice or recommendations of the
compensation consultant; or
``(ii) to affect the ability or obligation of a
compensation committee to exercise its own judgment in
fulfillment of the duties of the compensation committee.
``(2) Disclosure.--In any proxy or consent solicitation
material for an annual meeting of the shareholders (or a
special meeting in lieu of the annual meeting) occurring on
or after the date that is 1 year after the date of enactment
of this section, each issuer shall disclose in the proxy or
consent material, in accordance with regulations of the
Commission, whether--
``(A) the compensation committee of the issuer retained or
obtained the advice of a compensation consultant; and
``(B) the work of the compensation consultant has raised
any conflict of interest and, if so, the nature of the
conflict and how the conflict is being addressed.
``(d) Authority To Engage Independent Legal Counsel and
Other Advisers.--
``(1) In general.--The compensation committee of an issuer,
in its capacity as a committee of the board of directors,
may, in its sole discretion, retain and obtain the advice of
independent legal counsel and other advisers.
``(2) Direct responsibility of compensation committee.--The
compensation committee of an issuer shall be directly
responsible for the appointment, compensation, and oversight
of the work of independent legal counsel and other advisers.
``(3) Rule of construction.--This subsection may not be
construed--
``(A) to require a compensation committee to implement or
act consistently with the advice or recommendations of
independent legal counsel or other advisers under this
subsection; or
``(B) to affect the ability or obligation of a compensation
committee to exercise its own judgment in fulfillment of the
duties of the compensation committee.

[[Page S2923]]

``(e) Compensation of Compensation Consultants, Independent
Legal Counsel, and Other Advisers.--Each issuer shall provide
for appropriate funding, as determined by the compensation
committee in its capacity as a committee of the board of
directors, for payment of reasonable compensation--
``(1) to a compensation consultant; and
``(2) to independent legal counsel or any other adviser to
the compensation committee.
``(f) Commission Rules.--
``(1) In general.--Not later than 360 days after the date
of enactment of this section, the Commission shall, by rule,
direct the national securities exchanges and national
securities associations to prohibit the listing of any
security of an issuer that is not in compliance with the
requirements of this section.
``(2) Opportunity to cure defects.--The rules of the
Commission under paragraph (1) shall provide for appropriate
procedures for an issuer to have a reasonable opportunity to
cure any defects that would be the basis for the prohibition
under paragraph (1), before the imposition of such
prohibition.
``(3) Exemption authority.--
``(A) In general.--The rules of the Commission under
paragraph (1) shall permit a national securities exchange or
a national securities association to exempt a category of
issuers from the requirements under this section, as the
national securities exchange or the national securities
association determines is appropriate.
``(B) Considerations.--In determining appropriate
exemptions under subparagraph (A), the national securities
exchange or the national securities association shall take
into account the potential impact of the requirements of this
section on smaller reporting issuers.''.

SEC. 953. EXECUTIVE COMPENSATION DISCLOSURES.

(a) Disclosure of Pay Versus Performance.--Section 14 of
the Securities Exchange Act of 1934 (15 U.S.C. 78n), as
amended by this title, is amended by adding at the end the
following:
``(i) Disclosure of Pay Versus Performance.--The Commission
shall, by rule, require each issuer to disclose in any proxy
or consent solicitation material for an annual meeting of the
shareholders of the issuer a clear description of any
compensation required to be disclosed by the issuer under
section 229.402 of title 17, Code of Federal Regulations (or
any successor thereto), including information that shows the
relationship between executive compensation actually paid and
the financial performance of the issuer, taking into account
any change in the value of the shares of stock and dividends
of the issuer and any distributions. The disclosure under
this subsection may include a graphic representation of the
information required to be disclosed.''.
(b) Additional Disclosure Requirements.--
(1) In general.--The Commission shall amend section 229.402
of title 17, Code of Federal Regulations, to require each
issuer to disclose in any filing of the issuer described in
section 229.10(a) of title 17, Code of Federal Regulations
(or any successor thereto)--
(A) the median of the annual total compensation of all
employees of the issuer, except the chief executive officer
(or any equivalent position) of the issuer;
(B) the annual total compensation of the chief executive
officer (or any equivalent position) of the issuer; and
(C) the ratio of the amount described in subparagraph (A)
to the amount described in subparagraph (B).
(2) Total compensation.--For purposes of this subsection,
the total compensation of an employee of an issuer shall be
determined in accordance with section 229.402(c)(2)(x) of
title 17, Code of Federal Regulations, as in effect on the
day before the date of enactment of this Act.

SEC. 954. RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION.

The Securities Exchange Act of 1934 is amended by inserting
after section 10C, as added by section 952, the following:

``SEC. 10D. RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION
POLICY.

``(a) Listing Standards.--The Commission shall, by rule,
direct the national securities exchanges and national
securities associations to prohibit the listing of any
security of an issuer that does not comply with the
requirements of this section.
``(b) Recovery of Funds.--The rules of the Commission under
subsection (a) shall require each issuer to develop and
implement a policy providing--
``(1) for disclosure of the policy of the issuer on
incentive-based compensation that is based on financial
information required to be reported under the securities
laws; and
``(2) that, in the event that the issuer is required to
prepare an accounting restatement due to the material
noncompliance of the issuer with any financial reporting
requirement under the securities laws, the issuer will
recover from any current or former executive officer of the
issuer who received incentive-based compensation (including
stock options awarded as compensation) during the 3-year
period preceding the date on which the issuer is required to
prepare an accounting restatement, based on the erroneous
data, in excess of what would have been paid to the executive
officer under the accounting restatement.''.

SEC. 955. DISCLOSURE REGARDING EMPLOYEE AND DIRECTOR HEDGING.

Section 14 of the Securities Exchange Act of 1934 (15
U.S.C. 78n), as amended by this title, is amended by adding
at the end the following:
``(j) Disclosure of Hedging by Employees and Directors.--
The Commission shall, by rule, require each issuer to
disclose in any proxy or consent solicitation material for an
annual meeting of the shareholders of the issuer whether any
employee or member of the board of directors of the issuer,
or any designee of such employee or member, is permitted to
purchase financial instruments (including prepaid variable
forward contracts, equity swaps, collars, and exchange funds)
that are designed to hedge or offset any decrease in the
market value of equity securities--
``(1) granted to the employee or member of the board of
directors by the issuer as part of the compensation of the
employee or member of the board of directors; or
``(2) held, directly or indirectly, by the employee or
member of the board of directors.''.

SEC. 956. EXCESSIVE COMPENSATION BY HOLDING COMPANIES OF
DEPOSITORY INSTITUTIONS.

Section 5 of the Bank Holding Company Act of 1956 (12
U.S.C. 1844) is amended by adding at the end the following:
``(i) Excessive Compensation.--
``(1) In general.--Not later than 180 days after the
transfer date established under section 311 of the Restoring
American Financial Stability Act of 2010, the Board of
Governors, in consultation with the Comptroller of the
Currency and the Federal Deposit Insurance Corporation,
shall, by rule, establish standards prohibiting as an unsafe
and unsound practice any compensation plan of a bank holding
company that--
``(A) provides an executive officer, employee, director, or
principal shareholder of the bank holding company with
excessive compensation, fees, or benefits; or
``(B) could lead to material financial loss to the bank
holding company.
``(2) Considerations.--In establishing the standards under
paragraph (1), the Board of Governors shall take into
consideration the compensation standards described in section
39(c) of the Federal Deposit Insurance Act (12 U.S.C. 1831p-
1(c)) and the views and recommendations of the Comptroller of
the Currency and the Federal Deposit Insurance
Corporation.''.

SEC. 957. VOTING BY BROKERS.

Section 6(b) of the Securities Exchange Act of 1934 (15
U.S.C. 78f(b)) is amended--
(1) in paragraph (9)--
(A) in subparagraph (A), by redesignating clauses (i)
through (v) as subclauses (I) through (V), respectively, and
adjusting the margins accordingly;
(B) by redesignating subparagraphs (A) through (D) as
clauses (i) through (iv), respectively, and adjusting the
margins accordingly;
(C) by inserting ``(A)'' after ``(9)''; and
(D) in the matter immediately following clause (iv), as so
redesignated, by striking ``As used'' and inserting the
following:
``(B) As used''.
(2) by adding at the end the following:
``(10)(A) The rules of the exchange prohibit any member
that is not the beneficial owner of a security registered
under section 12 from granting a proxy to vote the security
in connection with a shareholder vote described in
subparagraph (B), unless the beneficial owner of the security
has instructed the member to vote the proxy in accordance
with the voting instructions of the beneficial owner.
``(B) A shareholder vote described in this subparagraph is
a shareholder vote with respect to the election of a member
of the board of directors of an issuer, executive
compensation, or any other significant matter, as determined
by the Commission, by rule.
``(C) Nothing in this paragraph shall be construed to
prohibit a national securities exchange from prohibiting a
member that is not the beneficial owner of a security
registered under section 12 from granting a proxy to vote the
security in connection with a shareholder vote not described
in subparagraph (A).''.

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

SEC. 961. REPORT AND CERTIFICATION OF INTERNAL SUPERVISORY
CONTROLS.

(a) Annual Reports and Certification.--Not later than 90
days after the end of each fiscal year, the Commission 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 conduct by
the Commission of examinations of registered entities,
enforcement investigations, and review of corporate financial
securities filings.
(b) Contents of Reports.--Each report under subsection (a)
shall contain--
(1) an assessment, as of the end of the most recent fiscal
year, of the effectiveness of--
(A) the internal supervisory controls of the Commission;
and
(B) the procedures of the Commission applicable to the
staff of the Commission who perform examinations of
registered entities, enforcement investigations, and reviews
of corporate financial securities filings;
(2) a certification that the Commission has adequate
internal supervisory controls to carry out the duties of the
Commission described in paragraph (1)(B); and
(3) a summary by the Comptroller General of the United
States of the review carried out under subsection (d).

[[Page S2924]]

(c) Certification.--
(1) Signature.--The certification under subsection (b)(2)
shall be signed by the Director of the Division of
Enforcement, the Director of the Division of Corporation
Finance, and the Director of the Office of Compliance
Inspections and Examinations (or the head of any successor
division or office).
(2) Content of certification.--Each individual described in
paragraph (1) shall certify that the individual--
(A) is directly responsible for establishing and
maintaining the internal supervisory controls of the Division
or Office of which the individual is the head;
(B) is knowledgeable about the internal supervisory
controls of the Division or Office of which the individual is
the head;
(C) has evaluated the effectiveness of the internal
supervisory controls during the 90-day period ending on the
final day of the fiscal year to which the report relates; and
(D) has disclosed to the Commission any significant
deficiencies in the design or operation of internal
supervisory controls that could adversely affect the ability
of the Division or Office to consistently conduct
inspections, or investigations, or reviews of filings with
professional competence and integrity.
(d) Review by the Comptroller General.--Not later than the
date on which the first report is submitted under subsection
(a), the Comptroller General of the United States 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 an initial report that
contains a review of the adequacy and effectiveness of the
internal supervisory control structure and procedures
described in subsection (b)(1).

SEC. 962. TRIENNIAL REPORT ON PERSONNEL MANAGEMENT.

(a) Triennial Report Required.--Once every 3 years, the
Comptroller General of the United States 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 quality of personnel
management by the Commission.
(b) Contents of Report.--Each report under subsection (a)
shall include--
(1) an evaluation of--
(A) the effectiveness of supervisors in using the skills,
talents, and motivation of the employees of the Commission to
achieve the goals of the Commission;
(B) the criteria for promoting employees of the Commission
to supervisory positions;
(C) the fairness of the application of the promotion
criteria to the decisions of the Commission;
(D) the competence of the professional staff of the
Commission;
(E) the efficiency of communication between the units of
the Commission regarding the work of the Commission
(including communication between divisions and between
subunits of a division) and the efforts by the Commission to
promote such communication;
(F) the turnover within subunits of the Commission,
including the identification of supervisors whose
subordinates have an unusually high rate of turnover;
(G) whether there are excessive numbers of low-level, mid-
level, or senior-level managers;
(H) any initiatives of the Commission that increase the
competence of the staff of the Commission;
(I) the actions taken by the Commission regarding employees
of the Commission who have failed to perform their duties;
and
(J) such other factors relating to the management of the
Commission as the Comptroller General determines are
appropriate;
(2) an evaluation of any improvements made with respect to
the areas described in paragraph (1) since the date of
submission of the previous report; and
(3) recommendations for how the Commission can use the
human resources of the Commission more effectively and
efficiently to carry out the mission of the Commission.
(c) Consultation.--In preparing the report under subsection
(a), the Comptroller General shall consult with current
employees of the Commission, retired employees and other
former employees of the Commission, the Inspector General of
the Commission, persons that have business before the
Commission, any union representing the employees of the
Commission, private management consultants, academics, and
any other source that the Comptroller General deems
appropriate.
(d) Report by Commission.--Not later than 90 days after the
date on which the Comptroller General submits each report
under subsection (a), the Commission 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 the actions taken by
the Commission in response to the recommendations contained
in the report under subsection (a).
(e) Reimbursements for Cost of Reports.--
(1) Reimbursements required.--The Commission shall
reimburse the Government Accountability Office for the full
cost of making the reports under this section, as billed
therefor by the Comptroller General.
(2) Crediting and use of reimbursements.--Such
reimbursements shall--
(A) be credited to the appropriation account ``Salaries and
Expenses, Government Accountability Office'' current when the
payment is received; and
(B) remain available until expended.

SEC. 963. ANNUAL FINANCIAL CONTROLS AUDIT.

(a) Reports of Commission.--
(1) Annual reports required.--Not later than 6 months after
the end of each fiscal year, the Commission shall publish and
submit to Congress a report that--
(A) describes the responsibility of the management of the
Commission for establishing and maintaining an adequate
internal control structure and procedures for financial
reporting; and
(B) contains an assessment of the effectiveness of the
internal control structure and procedures for financial
reporting of the Commission during that fiscal year.
(2) Attestation.--The reports required under paragraph (1)
shall be attested to by the Chairman and chief financial
officer of the Commission.
(b) Report by Comptroller General.--
(1) Report required.--Not later than 6 months after the end
of the first fiscal year after the date of enactment of this
Act, the Comptroller General of the United States shall
submit a report to Congress that assesses--
(A) the effectiveness of the internal control structure and
procedures of the Commission for financial reporting; and
(B) the assessment of the Commission under subsection
(a)(1)(B).
(2) Attestation.--The Comptroller General shall attest to,
and report on, the assessment made by the Commission under
subsection (a).
(c) Reimbursements for Cost of Reports.--
(1) Reimbursements required.--The Commission shall
reimburse the Government Accountability Office for the full
cost of making the reports under subsection (b), as billed
therefor by the Comptroller General.
(2) Crediting and use of reimbursements.--Such
reimbursements shall--
(A) be credited to the appropriation account ``Salaries and
Expenses, Government Accountability Office'' current when the
payment is received; and
(B) remain available until expended.

SEC. 964. REPORT ON OVERSIGHT OF NATIONAL SECURITIES
ASSOCIATIONS.

(a) Report Required.--Not later than 2 years after the date
of enactment of this Act, and every 3 years thereafter, the
Comptroller General of the United States 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 that includes an evaluation of
the oversight by the Commission of national securities
associations registered under section 15A of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-3) with respect to--
(1) the governance of such national securities
associations, including the identification and management of
conflicts of interest by such national securities
associations, together with an analysis of the impact of any
conflicts of interest on the regulatory enforcement or
rulemaking by such national securities associations;
(2) the examinations carried out by the national securities
associations, including the expertise of the examiners;
(3) the executive compensation practices of such national
securities associations;
(4) the arbitration services provided by the national
securities associations;
(5) the review performed by national securities
associations of advertising by the members of the national
securities associations;
(6) the cooperation with and assistance to State securities
administrators by the national securities associations to
promote investor protection;
(7) how the funding of national securities associations is
used to support the mission of the national securities
associations, including--
(A) the methods of funding;
(B) the sufficiency of funds;
(C) how funds are invested by the national securities
association pending use; and
(D) the impact of the methods, sufficiency, and investment
of funds on regulatory enforcement by the national securities
associations;
(8) the policies regarding the employment of former
employees of national securities associations by regulated
entities;
(9) the ongoing effectiveness of the rules of the national
securities associations in achieving the goals of the rules;
(10) the transparency of governance and activities of the
national securities associations; and
(11) any other issue that has an impact, as determined by
the Comptroller General, on the effectiveness of such
national securities associations in performing their mission
and in dealing fairly with investors and members;
(b) Reimbursements for Cost of Reports.--
(1) Reimbursements required.--The Commission shall
reimburse the Government Accountability Office for the full
cost of making the reports under subsection (a), as billed
therefor by the Comptroller General.
(2) Crediting and use of reimbursements.--Such
reimbursements shall--
(A) be credited to the appropriation account ``Salaries and
Expenses, Government Accountability Office'' current when the
payment is received; and
(B) remain available until expended.

[[Page S2925]]

SEC. 965. COMPLIANCE EXAMINERS.

Section 4 of the Securities Exchange Act of 1934 (15 U.S.C.
78d) is amended by adding at the end the following:
``(h) Examiners.--
``(1) Division of trading and markets.--The Division of
Trading and Markets of the Commission, or any successor
organizational unit, shall have a staff of examiners who
shall--
``(A) perform compliance inspections and examinations of
entities under the jurisdiction of that Division; and
``(B) report to the Director of that Division.
``(2) Division of investment management.--The Division of
Investment Management of the Commission, or any successor
organizational unit, shall have a staff of examiners who
shall--
``(A) perform compliance inspections and examinations of
entities under the jurisdiction of that Division; and
``(B) report to the Director of that Division.''.

SEC. 966. SUGGESTION PROGRAM FOR EMPLOYEES OF THE COMMISSION.

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended by inserting after section 4C (15 U.S.C. 78d-3)
the following:

``SEC. 4D. ADDITIONAL DUTIES OF INSPECTOR GENERAL.

``(a) Suggestion Submissions by Commission Employees.--
``(1) Hotline established.--The Inspector General of the
Commission shall establish and maintain a telephone hotline
or other electronic means for the receipt of--
``(A) suggestions by employees of the Commission for
improvements in the work efficiency, effectiveness, and
productivity, and the use of the resources, of the
Commission; and
``(B) allegations by employees of the Commission of waste,
abuse, misconduct, or mismanagement within the Commission.
``(2) Confidentiality.--The Inspector General shall
maintain as confidential--
``(A) the identity of any individual who provides
information by the means established under paragraph (1),
unless the individual requests otherwise, in writing; and
``(B) at the request of any such individual, any specific
information provided by the individual.
``(b) Consideration of Reports.--The Inspector General
shall consider any suggestions or allegations received by the
means established under subsection (a)(1), and shall
recommend appropriate action in relation to such suggestions
or allegations.
``(c) Recognition.--The Inspector General may recognize any
employee who makes a suggestion under subsection (a)(1) (or
by other means) that would or does--
``(1) increase the work efficiency, effectiveness, or
productivity of the Commission; or
``(2) reduce waste, abuse, misconduct, or mismanagement
within the Commission.
``(d) Report.--The Inspector General of the Commission
shall submit to Congress an annual report containing a
description of--
``(1) the nature, number, and potential benefits of any
suggestions received under subsection (a);
``(2) the nature, number, and seriousness of any
allegations received under subsection (a);
``(3) any recommendations made or actions taken by the
Inspector General in response to substantiated allegations
received under subsection (a); and
``(4) any action the Commission has taken in response to
suggestions or allegations received under subsection (a).
``(e) Funding.--The activities of the Inspector General
under this subsection shall be funded by the Securities and
Exchange Commission Investor Protection Fund established
under section 21F.''.

Subtitle G--Strengthening Corporate Governance

SEC. 971. ELECTION OF DIRECTORS BY MAJORITY VOTE IN
UNCONTESTED ELECTIONS.

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended by inserting after section 14A, as added by this
title, the following:

``SEC. 14B. CORPORATE GOVERNANCE.

``(a) Corporate Governance Standards.--
``(1) Listing standards.--
``(A) In general.--Not later than 1 year after the date of
enactment of this subsection, the Commission shall, by rule,
direct the national securities exchanges and national
securities associations to prohibit the listing of any
security of an issuer that is not in compliance with any of
the requirements of this subsection.
``(B) Opportunity to comply and cure.--The rules
established under this paragraph shall allow an issuer to
have an opportunity to come into compliance with the
requirements of this subsection, and to cure any defect that
would be the basis for a prohibition under subparagraph (A),
before the imposition of such prohibition.
``(C) Authority to exempt.--The Commission may, by rule or
order, exempt an issuer from any or all of the requirements
of this subsection and the rules issued under this
subsection, based on the size of the issuer, the market
capitalization of the issuer, the number of shareholders of
record of the issuer, or any other criteria, as the
Commission deems necessary and appropriate in the public
interest or for the protection of investors.
``(2) Commission rules on elections.--In an election for
membership on the board of directors of an issuer--
``(A) that is uncontested, each director who receives a
majority of the votes cast shall be deemed to be elected;
``(B) that is contested, if the number of nominees exceeds
the number of directors to be elected, each director shall be
elected by the vote of a plurality of the shares represented
at a meeting and entitled to vote; and
``(C) if a director of an issuer receives less than a
majority of the votes cast in an uncontested election--
``(i) the director shall tender the resignation of the
director to the board of directors; and
``(ii) the board of directors--

``(I) shall--

``(aa) accept the resignation of the director;
``(bb) determine a date on which the resignation will take
effect, within a reasonable period of time, as established by
the Commission; and
``(cc) make the date under item (bb) public within a
reasonable period of time, as established by the Commission;
or

``(II) shall, upon a unanimous vote of the board, decline
to accept the resignation and, not later than 30 days after
the date of the vote (or within such shorter period as the
Commission may establish), make public, together with a
discussion of the analysis used in reaching the conclusion,
the specific reasons that--

``(aa) the board chose not to accept the resignation; and
``(bb) the decision was in the best interests of the issuer
and the shareholders of the issuer.''.

SEC. 972. PROXY ACCESS.

(a) Proxy Access.--Section 14(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78n(a)) is amended--
(1) by inserting ``(1)'' after ``(a)''; and
(2) by adding at the end the following:
``(2) The rules and regulations prescribed by the
Commission under paragraph (1) may include--
``(A) a requirement that a solicitation of proxy, consent,
or authorization by (or on behalf of) an issuer include a
nominee submitted by a shareholder to serve on the board of
directors of the issuer; and
``(B) a requirement that an issuer follow a certain
procedure in relation to a solicitation described in
subparagraph (A).''.
(b) Regulations.--The Commission may issue rules permitting
the use by shareholders of proxy solicitation materials
supplied by an issuer of securities for the purpose of
nominating individuals to membership on the board of
directors of the issuer, under such terms and conditions as
the Commission determines are in the interests of
shareholders and for the protection of investors.

SEC. 973. DISCLOSURES REGARDING CHAIRMAN AND CEO STRUCTURES.

Section 14B of the Securities Exchange Act of 1934, as
added by section 971, is amended by adding at the end the
following:
``(b) Disclosures Regarding Chairman and CEO Structures.--
Not later than 180 days after the date of enactment of this
subsection, the Commission shall issue rules that require an
issuer to disclose in the annual proxy sent to investors the
reasons why the issuer has chosen--
``(1) the same person to serve as chairman of the board of
directors and chief executive officer (or in equivalent
positions); or
``(2) different individuals to serve as chairman of the
board of directors and chief executive officer (or in
equivalent positions of the issuer).''.

Subtitle H--Municipal Securities

SEC. 975. REGULATION OF MUNICIPAL SECURITIES AND CHANGES TO
THE BOARD OF THE MSRB.

(a) Registration of Municipal Securities Dealers and
Municipal Advisors.--Section 15B(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-4(a)) is amended--
(1) in paragraph (1)--
(A) by inserting ``(A)'' after ``(1)''; and
(B) by adding at the end the following:
``(B) It shall be unlawful for a municipal advisor to
provide advice to or on behalf of a municipal entity or
obligated person with respect to municipal financial products
or the issuance of municipal securities, or to undertake a
solicitation of a municipal entity or obligated person,
unless the municipal advisor is registered in accordance with
this subsection.'';
(2) in paragraph (2), by inserting ``or municipal advisor''
after ``municipal securities dealer'' each place that term
appears;
(3) in paragraph (3), by inserting ``or municipal advisor''
after ``municipal securities dealer'' each place that term
appears;
(4) in paragraph (4), by striking ``dealer, or municipal
securities dealer or class of brokers, dealers, or municipal
securities dealers'' and inserting ``dealer, municipal
securities dealer, or municipal advisor, or class of brokers,
dealers, municipal securities dealers, or municipal
advisors''; and
(5) by adding at the end the following:
``(5) No municipal advisor shall make use of the mails or
any means or instrumentality of interstate commerce to
provide advice to or on behalf of a municipal entity or
obligated person with respect to municipal financial
products, the issuance of municipal securities, or
participation in the issuance of municipal securities, or to
undertake a solicitation of a municipal entity or obligated
person, in connection with which such municipal advisor
engages in any fraudulent, deceptive, or manipulative act or
practice.''.

[[Page S2926]]

(b) Municipal Securities Rulemaking Board.--Section 15B(b)
of the Securities Exchange Act of 1934 (15 U.S.C. 78o-4(b))
is amended--
(1) in paragraph (1)--
(A) in the first sentence, by striking ``Not later than''
and all that follows through ``appointed by the Commission''
and inserting ``The Municipal Securities Rulemaking Board
shall be composed of 15 members, or such other number of
members as specified by rules of the Board pursuant to
paragraph (2)(B),'';
(B) by striking the second sentence and inserting the
following: ``The members of the Board shall serve as members
for a term of 3 years or for such other terms as specified by
rules of the Board pursuant to paragraph (2)(B), and shall
consist of (A) 8 individuals who are not associated with any
broker, dealer, municipal securities dealer, or municipal
advisor (other than by reason of being under common control
with, or indirectly controlling, any broker or dealer which
is not a municipal securities broker or municipal securities
dealer), at least 1 of whom shall be representative of
institutional or retail investors in municipal securities, at
least 1 of whom shall be representative of municipal
entities, and at least 1 of whom shall be a member of the
public with knowledge of or experience in the municipal
industry (which members are hereinafter referred to as
`public representatives'); and (B) 7 individuals who are
associated with a broker, dealer, municipal securities
dealer, or municipal advisor, including at least 1 individual
who is associated with and representative of brokers,
dealers, or municipal securities dealers that are not banks
or subsidiaries or departments or divisions of banks (which
members are hereinafter referred to as `broker-dealer
representatives'), at least 1 individual who is associated
with and representative of municipal securities dealers which
are banks or subsidiaries or departments or divisions of
banks (which members are hereinafter referred to as `bank
representatives'), and at least 1 individual who is
associated with a municipal advisor (which member is
hereinafter referred to as the `advisor representative').'';
and
(C) in the third sentence, by striking ``initial'';
(2) in paragraph (2)--
(A) in the matter preceding subparagraph (A)--
(i) by inserting before the period at the end of the first
sentence the following: ``and advice provided to or on behalf
of municipal entities or obligated persons by brokers,
dealers, municipal securities dealers, and municipal advisors
with respect to municipal financial products, the issuance of
municipal securities, or participation in the issuance of
municipal securities, and solicitations of municipal entities
or obligated persons undertaken by brokers, dealers,
municipal securities dealers, and municipal advisors''; and
(ii) by striking the second sentence;
(B) in subparagraph (A)--
(i) in the matter preceding clause (i)--

(I) by inserting ``, and no broker, dealer, municipal
securities dealer, or municipal advisor shall provide advice
to or on behalf of a municipal entity or obligated person
with respect to municipal financial products, the issuance of
municipal securities, or participation in the issuance of
municipal securities'' after ``sale of, any municipal
security''; and
(II) by inserting ``and municipal entities or obligated
persons'' after ``protection of investors'';

(ii) in clause (i), by striking ``municipal securities
brokers and municipal securities dealers'' each place that
term appears and inserting ``municipal securities brokers,
municipal securities dealers, and municipal advisors'';
(iii) in clause (ii), by adding ``and'' at the end;
(iv) in clause (iii), by striking ``; and'' and inserting a
period; and
(v) by striking clause (iv);
(C) in subparagraph (B), by striking ``nominations and
elections'' and all that follows through ``specify'' and
inserting ``nominations and elections of public
representatives, broker-dealer representatives, bank
representatives, and advisor representatives. Such rules
shall provide that the membership of the Board shall at all
times be as evenly divided in number as possible between
entities or individuals who are subject to regulation by the
Board and entities or individuals not subject to regulation
by the Board, provided, however, that a majority of the
members of the Board shall at all times be public
representatives. Such rules shall also specify'';
(D) in subparagraph (C)--
(i) by inserting ``and municipal financial products'' after
``municipal securities'' the first two times that term
appears;
(ii) by inserting ``, municipal entities, obligated
persons,'' before ``and the public interest'';
(iii) by striking ``between'' and inserting ``among'';
(iv) by striking ``issuers, municipal securities brokers,
or municipal securities dealers, to fix'' and inserting
``municipal entities, obligated persons, municipal securities
brokers, municipal securities dealers, or municipal advisors,
to fix''; and
(v) by striking ``brokers or municipal securities dealers,
to regulate'' and inserting ``brokers, municipal securities
dealers, or municipal advisors, to regulate'';
(E) in subparagraph (D)--
(i) by inserting ``and advice concerning municipal
financial products'' after ``transactions in municipal
securities'';
(ii) by striking ``That no'' and inserting ``that no'';
(iii) by inserting ``municipal advisor,'' before ``or
person associated''; and
(iv) by striking ``a municipal securities broker or
municipal securities dealer may be compelled'' and inserting
``a municipal securities broker, municipal securities dealer,
or municipal advisor may be compelled'';
(F) in subparagraph (E)--
(i) by striking ``municipal securities brokers and
municipal securities dealers'' and inserting ``municipal
securities brokers, municipal securities dealers, and
municipal advisors''; and
(ii) by striking ``municipal securities broker or municipal
securities dealer'' and inserting ``municipal securities
broker, municipal securities dealer, or municipal advisor'';
(G) in subparagraph (G), by striking ``municipal securities
brokers and municipal securities dealers'' and inserting
``municipal securities brokers, municipal securities dealers,
and municipal advisors'';
(H) in subparagraph (J)--
(i) by striking ``municipal securities broker and each
municipal securities dealer'' and inserting ``municipal
securities broker, municipal securities dealer, and municipal
advisor''; and
(ii) by striking the period at the end of the second
sentence and inserting ``, which may include charges for
failure to submit to the Board required information or
documents to any information system operated by the Board in
a full, accurate, or timely manner, or any other failure to
comply with the rules of the Board.'';
(I) in subparagraph (K)--
(i) by inserting ``broker, dealer, or'' before ``municipal
securities dealer'' each place that term appears; and
(ii) by striking ``municipal securities investment
portfolio'' and inserting ``related account of a broker,
dealer, or municipal securities dealer''; and
(J) by adding at the end the following:
``(L) provide continuing education requirements for
municipal advisors.
``(M) provide professional standards.
``(N) not impose a regulatory burden on small municipal
advisors that is not necessary or appropriate in the public
interest and for the protection of investors, municipal
entities, and obligated persons.'';
(3) by redesignating paragraph (3) as paragraph (7); and
(4) by inserting after paragraph (2) the following:
``(3) The Board, in conjunction with or on behalf of any
Federal financial regulator or self-regulatory organization,
may--
``(A) establish information systems; and
``(B) assess such reasonable fees and charges for the
submission of information to, or the receipt of information
from, such systems from any persons which systems may be
developed for the purposes of serving as a repository of
information from municipal market participants or otherwise
in furtherance of the purposes of the Board, a Federal
financial regulator, or a self-regulatory organization.
``(4) The Board shall provide guidance and assistance in
the enforcement of, and examination for, compliance with the
rules of the Board to the Commission, a registered securities
association under section 15A, or any other appropriate
regulatory agency, as applicable.''.
(c) Discipline of Dealers and Municipal Advisors and Other
Matters.--Section 15B(c) of the Securities Exchange Act of
1934 (15 U.S.C. 78o-4(c)) is amended--
(1) in paragraph (1), by inserting ``, and no broker,
dealer, municipal securities dealer, or municipal advisor
shall make use of the mails or any means or instrumentality
of interstate commerce to provide advice to or on behalf of a
municipal entity or obligated person with respect to
municipal financial products, the issuance of municipal
securities, or participation in the issuance of municipal
securities, or to undertake a solicitation of a municipal
entity or obligated person,'' after ``any municipal
security'';
(2) in paragraph (2), by inserting ``or municipal advisor''
after ``municipal securities dealer'' each place that term
appears;
(3) in paragraph (3)--
(A) by inserting ``or municipal entities or obligated
person'' after ``protection of investors'' each place that
term appears; and
(B) by inserting ``or municipal advisor'' after ``municipal
securities dealer'' each place that term appears;
(4) in paragraph (4), by inserting ``or municipal advisor''
after ``municipal securities dealer or obligated person''
each place that term appears;
(5) in paragraph (6)(B), by inserting ``or municipal
entities'' after ``protection of investors'';
(6) in paragraph (7)--
(A) in subparagraph (A)--
(i) in clause (i), by striking ``; and'' and inserting a
semicolon;
(ii) in clause (ii), by striking the period and inserting
``; and''; and
(iii) by adding at the end the following:
``(iii) the Commission, or its designee, in the case of
municipal advisors.''.
(B) in subparagraph (B), by inserting ``or municipal
entities or obligated person'' after ``protection of
investors''; and
(7) by adding at the end the following:

[[Page S2927]]

``(9)(A) Fines collected by the Commission for violations
of the rules of the Board shall be equally divided between
the Commission and the Board.
``(B) Fines collected by a registered securities
association under section 15A(7) with respect to violations
of the rules of the Board shall be accounted for by such
registered securities association separately from other fines
collected under section 15A(7) and shall be allocated between
such registered securities association and the Board at the
direction of the Commission.''.
(d) Issuance of Municipal Securities.--Section 15B(d)(2) of
the Securities Exchange Act of 1934 (15 U.S.C. 78o-4(d)) is
amended--
(1) by striking ``through a municipal securities broker or
municipal securities dealer or otherwise'' and inserting
``through a municipal securities broker, municipal securities
dealer, municipal advisor, or otherwise''; and
(2) by inserting ``or municipal advisors'' before ``to
furnish''.
(e) Definitions.--Section 15B of the Securities Exchange
Act of 1934 (15 U.S.C. 78o-4) is amended by adding at the end
the following:
``(e) Definitions.--For purposes of this section--
``(1) the term `Board' means the Municipal Securities
Rulemaking Board established under subsection (b)(1);
``(2) the term `guaranteed investment contract' includes
any investment that has specified withdrawal or reinvestment
provisions and a specifically negotiated or bid interest
rate, and also includes any agreement to supply investments
on 2 or more future dates, such as a forward supply contract;
``(3) the term `investment strategies' includes plans or
programs for the investment of the proceeds of municipal
securities that are not municipal derivatives, guaranteed
investment contracts, and the recommendation of and brokerage
of municipal escrow investments;
``(4) the term `municipal advisor'--
``(A) means a person (who is not a municipal entity or an
employee of a municipal entity) that--
``(i) provides advice to or on behalf of a municipal entity
or obligated person with respect to municipal financial
products or the issuance of municipal securities, including
advice with respect to the structure, timing, terms, and
other similar matters concerning such financial products or
issues;
``(ii) participates in the issuance of municipal
securities; or
``(iii) undertakes a solicitation of a municipal entity;
``(B) includes financial advisors, guaranteed investment
contract brokers, third-party marketers, placement agents,
solicitors, finders, and swap advisors, if such persons are
described in any of clauses (i) through (iii) of subparagraph
(A); and
``(C) does not include a broker, dealer, or municipal
securities dealer serving as an underwriter (as defined in
section 2(a)(11) of the Securities Act of 1933) (15 U.S.C.
77b(a)(11)), any investment adviser registered under the
Investment Advisers Act of 1940, or persons associated with
such investment advisers who are providing investment advice,
attorneys offering legal advice or providing services that
are of a traditional legal nature, or engineers providing
engineering advice;
``(5) the term `municipal derivative' means any financial
instrument or contract designed to hedge a risk (including
interest rate swaps, basis swaps, credit default swaps, caps,
floors, and collars);
``(6) the term `municipal financial product' means
municipal derivatives, guaranteed investment contracts, and
investment strategies;
``(7) the term `rules of the Board' means the rules
proposed and adopted by the Board under subsection (b)(2);
``(8) the term `person associated with a municipal advisor'
or `associated person of an advisor' means--
``(A) any partner, officer, director, or branch manager of
such municipal advisor (or any person occupying a similar
status or performing similar functions);
``(B) any other employee of such municipal advisor who is
engaged in the management, direction, supervision, or
performance of any activities relating to the provision of
advice to or on behalf of a municipal entity or obligated
person with respect to municipal financial products, the
issuance of municipal securities, or participation in the
issuance of municipal securities; and
``(C) any person directly or indirectly controlling,
controlled by, or under common control with such municipal
advisor;
``(9) the term `municipal entity' means any State,
political subdivision of a State, or municipal corporate
instrumentality of a State, including--
``(A) any agency, authority, or instrumentality of the
State, political subdivision, or municipal corporate
instrumentality;
``(B) any plan, program, or pool of assets sponsored or
established by the State, political subdivision, or municipal
corporate instrumentality or any agency, authority, or
instrumentality thereof; and
``(C) any other issuer of municipal securities;
``(10) the term `solicitation of a municipal entity or
obligated person' means a direct or indirect communication
with a municipal entity or obligated person made by a person,
for direct or indirect compensation, on behalf of a broker,
dealer, municipal securities dealer, municipal advisor, or
investment adviser (as defined in section 202 of the
Investment Advisers Act of 1940) that does not control, is
not controlled by, or is not under common control with the
person undertaking such solicitation for the purpose of
obtaining or retaining an engagement by a municipal entity or
obligated person of a broker, dealer, municipal securities
dealer, or municipal advisor for or in connection with
municipal financial products, the issuance of municipal
securities, or participation in the issuance of municipal
securities, or of an investment adviser to provide investment
advisory services to or on behalf of a municipal entity; and
``(11) the term `obligated person' means any person,
including an issuer of municipal securities, who is either
generally or through an enterprise, fund, or account of such
person, committed by contract or other arrangement to support
the payment of all or part of the obligations on the
municipal securities to be sold in an offering of municipal
securities.''.
(f) Registered Securities Association.--Section 15A(b) of
the Securities Exchange Act of 1934 (15 U.S.C. 78o-3(b)) is
amended by adding at the end the following:
``(15) The rules of the association provide that the
association shall--
``(A) request guidance from the Municipal Securities
Rulemaking Board in interpretation of the rules of the
Municipal Securities Rulemaking Board; and
``(B) provide information to the Municipal Securities
Rulemaking Board about the enforcement actions and
examinations of the association under section 15B(b)(2)(E),
so that the Municipal Securities Rulemaking Board may--
``(i) assist in such enforcement actions and examinations;
and
``(ii) evaluate the ongoing effectiveness of the rules of
the Board.''.
(g) Registration and Regulation of Brokers and Dealers.--
Section 15 of the Securities Exchange Act of 1934 is
amended--
(1) in subsection (b)(4), by inserting ``municipal
advisor,'' after ``municipal securities dealer'' each place
that term appears; and
(2) in subsection (c), by inserting ``broker, dealer, or''
before ``municipal securities dealer'' each place that term
appears.
(h) Accounts and Records, Reports, Examinations of
Exchanges, Members, and Others.--Section 17(a)(1) of the
Securities Exchange Act of 1934 is amended by inserting
``municipal advisor,'' after ``municipal securities dealer''.
(i) Savings Clause.--Notwithstanding any provision of the
Over-the-Counter Derivatives Markets Act of 2010, or any
amendment made pursuant to such Act, the provisions of this
section, and the amendments made pursuant to this section,
shall apply to any municipal derivative.
(j) Effective Date.--This section, and the amendments made
by this section, shall take effect on October 1, 2010.

SEC. 976. GOVERNMENT ACCOUNTABILITY OFFICE STUDY OF INCREASED
DISCLOSURE TO INVESTORS.

(a) Study.--The Comptroller General of the United States
shall conduct a study and review of the disclosure required
to be made by issuers of municipal securities.
(b) Subjects for Evaluation.--In conducting the study under
subsection (a), the Comptroller General of the United States
shall--
(1) broadly describe--
(A) the size of the municipal securities markets and the
issuers and investors; and
(B) the disclosures provided by issuers to investors;
(2) compare the amount, frequency, and quality of
disclosures that issuers of municipal securities are required
by law to provide for the benefit of municipal securities
holders, including the amount of and frequency of disclosures
actually provided by issuers of municipal securities, with
the amount of and frequency of disclosures that issuers of
corporate securities provide for the benefit of corporate
securities holders, taking into account the differences
between issuers of municipal securities and issuers of
corporate securities;
(3) evaluate the costs and benefits to various types of
issuers of municipal securities of requiring issuers of
municipal bonds to provide additional financial disclosures
for the benefit of investors;
(4) evaluate the potential benefit to investors from
additional financial disclosures by issuers of municipal
bonds; and
(5) make recommendations relating to disclosure
requirements for municipal issuers, including the
advisability of the repeal or retention of section 15B(d) of
the Securities Exchange Act of 1934 (15 U.S.C. 78o-4(d))
(commonly known as the ``Tower Amendment'').
(c) Report.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General of the United
States shall submit a report to Congress on the results of
the study conducted under subsection (a), including
recommendations for how to improve disclosure by issuers of
municipal securities.

SEC. 977. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON THE
MUNICIPAL SECURITIES MARKETS.

(a) Study.--The Comptroller General of the United States
shall conduct a study of the municipal securities markets.
(b) Report.--Not later than 180 days after the date of
enactment of this Act, the Comptroller General of the United
States shall

[[Page S2928]]

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, with copies to the
Special Committee on Aging of the Senate and the Commission,
on the results of the study conducted under subsection (a),
including--
(1) an analysis of the mechanisms for trading, quality of
trade executions, market transparency, trade reporting, price
discovery, settlement clearing, and credit enhancements;
(2) the needs of the markets and investors and the impact
of recent innovations;
(3) recommendations for how to improve the transparency,
efficiency, fairness, and liquidity of trading in the
municipal securities markets, including with reference to
items listed in paragraph (1); and
(4) potential uses of derivatives in the municipal
securities markets.
(c) Responses.--Not later than 180 days after receipt of
the report required under subsection (b), the Commission
shall submit a response to the Committee on Banking, Housing,
and Urban Affairs of the Senate, and the Committee on
Financial Services of the House of Representatives, with a
copy to the Special Committee on Aging of the Senate, stating
the actions the Commission has taken in response to the
recommendations contained in such report.

SEC. 978. STUDY OF FUNDING FOR GOVERNMENT ACCOUNTING
STANDARDS BOARD.

(a) Study.--The Commission shall conduct a study that
evaluates--
(1) the role and importance of the Government Accounting
Standards Board in the municipal securities markets;
(2) the manner in which the Government Accounting Standards
Board is funded, and how such manner of funding affects the
financial information available to securities investors;
(3) the advisability of changes to the manner in which the
Government Accounting Standards Board is funded; and
(4) whether legislative changes to the manner in which the
Government Accounting Standards Board is funded are necessary
for the benefit of investors and in the public interest.
(b) Consultation.--In conducting the study required under
subsection (a), the Commission shall consult with State and
local government financial officers.
(c) Report.--Not later than 270 days after the date of
enactment of this Act, the Commission 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
subsection (a).

SEC. 979. COMMISSION OFFICE OF MUNICIPAL SECURITIES.

(a) In General.--There shall be in the Commission an Office
of Municipal Securities, which shall--
(1) administer the rules of the Commission with respect to
the practices of municipal securities brokers and dealers,
municipal securities advisors, municipal securities
investors, and municipal securities issuers; and
(2) coordinate with the Municipal Securities Rulemaking
Board for rulemaking and enforcement actions as required by
law.
(b) Director of the Office.--The head of the Office of
Municipal Securities shall be the Director, who shall report
to the Chairman.
(c) Staffing.--
(1) In general.--The Office of Municipal Securities shall
be staffed sufficiently to carry out the requirements of this
section.
(2) Requirement.--The staff of the Office of Municipal
Securities shall include individuals with knowledge of and
expertise in municipal finance.

Subtitle I--Public Company Accounting Oversight Board, Portfolio
Margining, and Other Matters

SEC. 981. AUTHORITY TO SHARE CERTAIN INFORMATION WITH FOREIGN
AUTHORITIES.

(a) Definition.--Section 2(a) of the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7201(a)) is amended by adding at the end the
following:
``(17) Foreign auditor oversight authority.--The term
`foreign auditor oversight authority' means any governmental
body or other entity empowered by a foreign government to
conduct inspections of public accounting firms or otherwise
to administer or enforce laws related to the regulation of
public accounting firms.''.
(b) Availability To Share Information.--Section 105(b)(5)
of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(b)(5)) is
amended by adding at the end the following:
``(C) Availability to foreign oversight authorities.--
Without the loss of its status as confidential and privileged
in the hands of the Board, all information referred to in
subparagraph (A) that relates to a public accounting firm
that a foreign government has empowered a foreign auditor
oversight authority to inspect or otherwise enforce laws with
respect to, may, at the discretion of the Board, be made
available to the foreign auditor oversight authority, if--
``(i) the Board finds that it is necessary to accomplish
the purposes of this Act or to protect investors;
``(ii) the foreign auditor oversight authority provides--

``(I) such assurances of confidentiality as the Board may
request;
``(II) a description of the applicable information systems
and controls of the foreign auditor oversight authority; and
``(III) a description of the laws and regulations of the
foreign government of the foreign auditor oversight authority
that are relevant to information access; and

``(iii) the Board determines that it is appropriate to
share such information.''.
(c) Conforming Amendment.--Section 105(b)(5)(A) of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(b)(5)(A)) is
amended by striking ``subparagraph (B)'' and inserting
``subparagraphs (B) and (C)''.

SEC. 982. OVERSIGHT OF BROKERS AND DEALERS.

(a) Definitions.--
(1) Definitions amended.--Title I of the Sarbanes-Oxley Act
of 2002 (15 U.S.C. 7201 et seq.) is amended by adding at the
end the following new section:

``SEC. 110. DEFINITIONS.

``For the purposes of this title, the following definitions
shall apply:
``(1) Audit.--The term `audit' means an examination of the
financial statements, reports, documents, procedures,
controls, or notices of any issuer, broker, or dealer by an
independent public accounting firm in accordance with the
rules of the Board or the Commission, for the purpose of
expressing an opinion on the financial statements or
providing an audit report.
``(2) Audit report.--The term `audit report' means a
document, report, notice, or other record--
``(A) prepared following an audit performed for purposes of
compliance by an issuer, broker, or dealer with the
requirements of the securities laws; and
``(B) in which a public accounting firm either--
``(i) sets forth the opinion of that firm regarding a
financial statement, report, notice, or other document,
procedures, or controls; or
``(ii) asserts that no such opinion can be expressed.
``(3) Broker.--The term `broker' means a broker (as such
term is defined in section 3(a)(4) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)(4))) that is required to file a
balance sheet, income statement, or other financial statement
under section 17(e)(1)(A) of such Act (15 U.S.C.
78q(e)(1)(A)), where such balance sheet, income statement, or
financial statement is required to be certified by a
registered public accounting firm.
``(4) Dealer.--The term `dealer' means a dealer (as such
term is defined in section 3(a)(5) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)(5))) that is required to file a
balance sheet, income statement, or other financial statement
under section 17(e)(1)(A) of such Act (15 U.S.C.
78q(e)(1)(A)), where such balance sheet, income statement, or
financial statement is required to be certified by a
registered public accounting firm.
``(5) Professional standards.--The term `professional
standards' means--
``(A) accounting principles that are--
``(i) established by the standard setting body described in
section 19(b) of the Securities Act of 1933, as amended by
this Act, or prescribed by the Commission under section 19(a)
of that Act (15 U.S.C. 17a(s)) or section 13(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78a(m)); and
``(ii) relevant to audit reports for particular issuers,
brokers, or dealers, or dealt with in the quality control
system of a particular registered public accounting firm; and
``(B) auditing standards, standards for attestation
engagements, quality control policies and procedures, ethical
and competency standards, and independence standards
(including rules implementing title II) that the Board or the
Commission determines--
``(i) relate to the preparation or issuance of audit
reports for issuers, brokers, or dealers; and
``(ii) are established or adopted by the Board under
section 103(a), or are promulgated as rules of the
Commission.
``(6) Self-regulatory organization.--The term `self-
regulatory organization' has the same meaning as in section
3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)).''.
(2) Conforming amendment.--Section 2(a) of the Sarbanes-
Oxley Act of 2002 (15 U.S.C. 7201(a)) is amended in the
matter preceding paragraph (1), by striking ``In this'' and
inserting ``Except as otherwise specifically provided in this
Act, in this''.
(b) Establishment and Administration of the Public Company
Accounting Oversight Board.--Section 101 of the Sarbanes-
Oxley Act of 2002 (15 U.S.C. 7211) is amended--
(1) by striking ``issuers'' each place that term appears
and inserting ``issuers, brokers, and dealers''; and
(2) in subsection (a)--
(A) by striking ``public companies'' and inserting
``companies''; and
(B) by striking ``for companies the securities of which are
sold to, and held by and for, public investors''.
(c) Registration With the Board.--Section 102 of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7212) is amended--
(1) in subsection (a)--
(A) by striking ``Beginning 180'' and all that follows
through ``101(d), it'' and inserting ``It''; and
(B) by striking ``issuer'' and inserting ``issuer, broker,
or dealer'';
(2) in subsection (b)--
(A) in paragraph (2)(A), by striking ``issuers'' and
inserting ``issuers, brokers, and dealers''; and

[[Page S2929]]

(B) by striking ``issuer'' each place that term appears and
inserting ``issuer, broker, or dealer''.
(d) Auditing and Independence.--Section 103(a) of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7213(a)) is amended--
(1) in paragraph (1), by striking ``and such ethics
standards'' and inserting ``such ethics standards, and such
independence standards'';
(2) in paragraph (2)(A)(iii), by striking ``describe in
each audit report'' and inserting ``in each audit report for
an issuer, describe''; and
(3) in paragraph (2)(B)(i), by striking ``issuers'' and
inserting ``issuers, brokers, and dealers''.
(e) Inspections of Registered Public Accounting Firms.--
Section 104 of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7214) is amended--
(1) in subsection (a), by striking ``issuers'' and
inserting ``issuers, brokers, and dealers''; and
(2) in subsection (b)(1)--
(A) by striking ``audit reports for'' each place that term
appears and inserting ``audit reports on annual financial
statements for'';
(B) in subparagraph (A), by striking ``and'' at the end;
(C) in subparagraph (B), by striking the period at the end
and inserting ``; and''; and
(D) by adding at the end the following:
``(C) with respect to each registered public accounting
firm that regularly provides audit reports and that is not
described in subparagraph (A) or (B), on a basis determined
by the Board, by rule, that is consistent with the public
interest and protection of investors.''.
(f) Investigations and Disciplinary Proceedings.--Section
105(c)(7)(B) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7215(c)(7)(B)) is amended--
(1) in the subparagraph heading, by inserting ``, broker,
or dealer'' after ``issuer'';
(2) by striking ``any issuer'' each place that term appears
and inserting ``any issuer, broker, or dealer''; and
(3) by striking ``an issuer under this subsection'' and
inserting ``a registered public accounting firm under this
subsection''.
(g) Foreign Public Accounting Firms.--Section 106(a) of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7216(a)) is amended--
(1) in paragraph (1), by striking ``issuer'' and inserting
``issuer, broker, or dealer''; and
(2) in paragraph (2), by striking ``issuers'' and inserting
``issuers, brokers, or dealers''.
(h) Funding.--Section 109 of the Sarbanes-Oxley Act of 2002
(15 U.S.C. 7219) is amended--
(1) in subsection (c)(2), by striking ``subsection (i)''
and inserting ``subsection (j)'';
(2) in subsection (d)--
(A) in paragraph (2), by striking ``allowing for
differentiation among classes of issuers, as appropriate''
and inserting ``and among brokers and dealers, in accordance
with subsection (h), and allowing for differentiation among
classes of issuers, brokers and dealers, as appropriate'';
and
(B) by adding at the end the following:
``(3) Brokers and dealers.--The Board shall begin the
allocation, assessment, and collection of fees under
paragraph (2) with respect to brokers and dealers with the
payment of support fees to fund the first full fiscal year
beginning after the effective date of this paragraph.'';
(3) by redesignating subsections (h), (i), and (j) as
subsections (i), (j), and (k), respectively; and
(4) by inserting after subsection (g) the following:
``(h) Allocation of Accounting Support Fees Among Brokers
and Dealers.--
``(1) Obligation to pay.--Each broker or dealer shall pay
to the Board the annual accounting support fee allocated to
such broker or dealer under this section.
``(2) Allocation.--Any amount due from a broker or dealer
(or from a particular class of brokers and dealers) under
this section shall be allocated among brokers and dealers and
payable by the broker or dealer (or the brokers and dealers
in the particular class, as applicable).
``(3) Proportionality.--The amount due from a broker or
dealer shall be in proportion to the net capital of the
broker or dealer, compared to the total net capital of all
brokers and dealers, in accordance with rules issued by the
Board.''.
(i) Referral of Investigations to a Self-regulatory
Organization.--Section 105(b)(4)(B) of the Sarbanes-Oxley Act
of 2002 (15 U.S.C. 7215(b)(4)(B)) is amended--
(1) by redesignating clauses (ii) and (iii) as clauses
(iii) and (iv), respectively; and
(2) by inserting after clause (i) the following:
``(ii) to a self-regulatory organization, in the case of an
investigation that concerns an audit report for a broker or
dealer that is under the jurisdiction of such self-regulatory
organization;''.
(j) Use of Documents Related to an Inspection or
Investigation.--Section 105(b)(5)(B)(ii) of the Sarbanes-
Oxley Act of 2002 (15 U.S.C. 7215(b)(5)(B)(ii)) is amended--
(1) in subclause (III), by striking ``and'' at the end;
(2) in subclause (IV), by striking the comma and inserting
``; and''; and
(3) by inserting after subclause (IV) the following:

``(V) a self-regulatory organization, with respect to an
audit report for a broker or dealer that is under the
jurisdiction of such self-regulatory organization,''.

(k) Effective Date.--The amendments made by this section
shall take effect 180 days after the date of enactment of
this Act.

SEC. 983. PORTFOLIO MARGINING.

(a) Advances.--Section 9(a)(1) of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78fff-3(a)(1)) is amended
by inserting ``or options on commodity futures contracts''
after ``claim for securities''.
(b) Definitions.--Section 16 of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78lll) is amended--
(1) by striking paragraph (2) and inserting the following:
``(2) Customer.--
``(A) In general.--The term `customer' of a debtor means
any person (including any person with whom the debtor deals
as principal or agent) who has a claim on account of
securities received, acquired, or held by the debtor in the
ordinary course of its business as a broker or dealer from or
for the securities accounts of such person for safekeeping,
with a view to sale, to cover consummated sales, pursuant to
purchases, as collateral, security, or for purposes of
effecting transfer.
``(B) Included persons.--The term `customer' includes--
``(i) any person who has deposited cash with the debtor for
the purpose of purchasing securities;
``(ii) any person who has a claim against the debtor for
cash, securities, futures contracts, or options on futures
contracts received, acquired, or held in a portfolio
margining account carried as a securities account pursuant to
a portfolio margining program approved by the Commission; and
``(iii) any person who has a claim against the debtor
arising out of sales or conversions of such securities.
``(C) Excluded persons.--The term `customer' does not
include any person, to the extent that--
``(i) the claim of such person arises out of transactions
with a foreign subsidiary of a member of SIPC; or
``(ii) such person has a claim for cash or securities which
by contract, agreement, or understanding, or by operation of
law, is part of the capital of the debtor, or is subordinated
to the claims of any or all creditors of the debtor,
notwithstanding that some ground exists for declaring such
contract, agreement, or understanding void or voidable in a
suit between the claimant and the debtor.'';
(2) in paragraph (4)--
(A) in subparagraph (C), by striking ``and'' at the end;
(B) by redesignating subparagraph (D) as subparagraph (E);
and
(C) by inserting after subparagraph (C) the following:
``(D) in the case of a portfolio margining account of a
customer that is carried as a securities account pursuant to
a portfolio margining program approved by the Commission, a
futures contract or an option on a futures contract received,
acquired, or held by or for the account of a debtor from or
for such portfolio margining account, and the proceeds
thereof; and'';
(3) in paragraph (9), in the matter following subparagraph
(L), by inserting after ``Such term'' the following:
``includes revenues earned by a broker or dealer in
connection with a transaction in the portfolio margining
account of a customer carried as securities accounts pursuant
to a portfolio margining program approved by the Commission.
Such term''; and
(4) in paragraph (11)--
(A) in subparagraph (A)--
(i) by striking ``filing date, all'' and all that follows
through the end of the subparagraph and inserting the
following: ``filing date--
``(i) all securities positions of such customer (other than
customer name securities reclaimed by such customer); and
``(ii) all positions in futures contracts and options on
futures contracts held in a portfolio margining account
carried as a securities account pursuant to a portfolio
margining program approved by the Commission, including all
property collateralizing such positions, to the extent that
such property is not otherwise included herein; minus''; and
(B) in the matter following subparagraph (C), by striking
``In determining'' and inserting the following: ``A claim for
a commodity futures contract received, acquired, or held in a
portfolio margining account pursuant to a portfolio margining
program approved by the Commission or a claim for a security
futures contract, shall be deemed to be a claim with respect
to such contract as of the filing date, and such claim shall
be treated as a claim for cash. In determining''.

SEC. 984. LOAN OR BORROWING OF SECURITIES.

(a) Rulemaking Authority.--Section 10 of the Securities
Exchange Act of 1934 (15 U.S.C. 78j) is amended by adding at
the end the following:
``(c)(1) To effect, accept, or facilitate a transaction
involving the loan or borrowing of securities in
contravention of such rules and regulations as the Commission
may prescribe as necessary or appropriate in the public
interest or for the protection of investors.
``(2) Nothing in paragraph (1) may be construed to limit
the authority of the appropriate Federal banking agency (as
defined in section 3(q) of the Federal Deposit Insurance Act
(12 U.S.C. 1813(q))), the National Credit Union
Administration, or any other Federal department or agency
having a responsibility under Federal law to prescribe rules
or regulations restricting transactions involving the loan or
borrowing of securities in

[[Page S2930]]

order to protect the safety and soundness of a financial
institution or to protect the financial system from systemic
risk.''.
(b) Rulemaking Required.--Not later than 2 years after the
date of enactment of this Act, the Commission shall
promulgate rules that are designed to increase the
transparency of information available to brokers, dealers,
and investors, with respect to the loan or borrowing of
securities.

SEC. 985. TECHNICAL CORRECTIONS TO FEDERAL SECURITIES LAWS.

(a) Securities Act of 1933.--The Securities Act of 1933 (15
U.S.C. 77a et seq.) is amended--
(1) in section 3(a)(4) (15 U.S.C. 77c(a)(4)), by striking
``individual;'' and inserting ``individual,'';
(2) in section 18 (15 U.S.C. 77r)--
(A) in subsection (b)(1)(C), by striking ``is a security''
and inserting ``a security''; and
(B) in subsection (c)(2)(B)(i), by striking ``State, or''
and inserting ``State or'';
(3) in section 19(d)(6)(A) (15 U.S.C. 77s(d)(6)(A)), by
striking ``in paragraph (1) of (3)'' and inserting ``in
paragraph (1) or (3)''; and
(4) in section 27A(c)(1)(B)(ii) (15 U.S.C. 77z-
2(c)(1)(B)(ii)), by striking ``business entity;'' and
inserting ``business entity,''.
(b) Securities Exchange Act of 1934.--The Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended--
(1) in section 2 (15 U.S.C. 78b), by striking ``affected''
and inserting ``effected'';
(2) in section 3 (15 U.S.C. 78c)--
(A) in subsection (a)(55)(A), by striking ``section
3(a)(12) of the Securities Exchange Act of 1934'' and
inserting ``section 3(a)(12) of this title''; and
(B) in subsection (g), by striking ``company, account
person, or entity'' and inserting ``company, account, person,
or entity'';
(3) in section 10A(i)(1)(B) (15 U.S.C. 78j-1(i)(1)(B))--
(A) in the subparagraph heading, by striking ``minimus''
and inserting ``minimis''; and
(B) in clause (i), by striking ``nonaudit'' and inserting
``non-audit'';
(4) in section 13(b)(1) (15 U.S.C. 78m(b)(1)), by striking
``earning statement'' and inserting ``earnings statement'';
(5) in section 15 (15 U.S.C. 78o)--
(A) in subsection (b)(1)--
(i) in subparagraph (B), by striking ``The order granting''
and all that follows through ``from such membership.''; and
(ii) in the undesignated matter immediately following
subparagraph (B), by inserting after the first sentence the
following: ``The order granting registration shall not be
effective until such broker or dealer has become a member of
a registered securities association, or until such broker or
dealer has become a member of a national securities exchange,
if such broker or dealer effects transactions solely on that
exchange, unless the Commission has exempted such broker or
dealer, by rule or order, from such membership.'';
(6) in section 15C(a)(2) (15 U.S.C. 78o-5(a)(2))--
(A) by redesignating clauses (i) and (ii) as subparagraphs
(A) and (B), respectively, and adjusting the subparagraph
margins accordingly;
(B) in subparagraph (B), as so redesignated, by striking
``The order granting'' and all that follows through ``from
such membership.''; and
(C) in the matter following subparagraph (B), as so
redesignated, by inserting after the first sentence the
following: ``The order granting registration shall not be
effective until such government securities broker or
government securities dealer has become a member of a
national securities exchange registered under section 6 of
this title, or a securities association registered under
section 15A of this title, unless the Commission has exempted
such government securities broker or government securities
dealer, by rule or order, from such membership.'';
(7) in section 17(b)(1)(B) (15 U.S.C. 78q(b)(1)(B)), by
striking ``15A(k) gives'' and inserting ``15A(k), give''; and
(8) in section 21C(c)(2) (15 U.S.C. 78u-3(c)(2)), by
striking ``paragraph (1) subsection'' and inserting
``Paragraph (1)''.
(c) Trust Indenture Act of 1939.--The Trust Indenture Act
of 1939 (15 U.S.C. 77aaa et seq.) is amended--
(1) in section 304(b) (15 U.S.C. 77ddd(b)), by striking
``section 2 of such Act'' and inserting ``section 2(a) of
such Act''; and
(2) in section 317(a)(1) (15 U.S.C. 77qqq(a)(1)), by
striking ``, in the'' and inserting ``in the''.
(d) Investment Company Act of 1940.--The Investment Company
Act of 1940 (15 U.S.C. 80a-1 et seq.) is amended--
(1) in section 2(a)(19) (15 U.S.C. 80a-2(a)(19)), in the
matter following subparagraph (B)(vii)--
(A) by striking ``clause (vi)'' each place that term
appears and inserting ``clause (vii)''; and
(B) in each of subparagraphs (A)(vi) and (B)(vi), by adding
``and'' at the end of subclause (III);
(2) in section 9(b)(4)(B) (15 U.S.C. 80a-9(b)(4)(B)), by
adding ``or'' after the semicolon at the end;
(3) in section 12(d)(1)(J) (15 U.S.C. 80a-12(d)(1)(J)), by
striking ``any provision of this subsection'' and inserting
``any provision of this paragraph'';
(4) in section 17(f) (15 U.S.C. 80a-17(f))--
(A) in paragraph (4), by striking ``No such member'' and
inserting ``No member of a national securities exchange'';
and
(B) in paragraph (6), by striking ``company may serve'' and
inserting ``company, may serve''; and
(5) in section 61(a)(3)(B)(iii) (15 U.S.C. 80a-
60(a)(3)(B)(iii))--
(A) by striking ``paragraph (1) of section 205'' and
inserting ``section 205(a)(1)''; and
(B) by striking ``clause (A) or (B) of that section'' and
inserting ``paragraph (1) or (2) of section 205(b)''.
(e) Investment Advisers Act of 1940.--The Investment
Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) is amended--
(1) in section 203 (15 U.S.C. 80b-3)--
(A) in subsection (c)(1)(A), by striking ``principal
business office and'' and inserting ``principal office,
principal place of business, and''; and
(B) in subsection (k)(4)(B), in the matter following clause
(ii), by striking ``principal place of business'' and
inserting ``principal office or place of business'';
(2) in section 206(3) (15 U.S.C. 80b-6(3)), by adding
``or'' after the semicolon at the end;
(3) in section 213(a) (15 U.S.C. 80b-13(a)), by striking
``principal place of business'' and inserting ``principal
office or place of business''; and
(4) in section 222 (15 U.S.C. 80b-18a), by striking
``principal place of business'' each place that term appears
and inserting ``principal office and place of business''.

SEC. 986. CONFORMING AMENDMENTS RELATING TO REPEAL OF THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935.

(a) Securities Exchange Act of 1934.--The Securities
Exchange Act of 1934 (15 U.S.C. 78 et seq.) is amended--
(1) in section 3(a)(47) (15 U.S.C. 78c(a)(47)), by striking
``the Public Utility Holding Company Act of 1935 (15 U.S.C.
79a et seq.),'';
(2) in section 12(k) (15 U.S.C. 78l(k)), by amending
paragraph (7) to read as follows:
``(7) Definition.--For purposes of this subsection, the
term `emergency' means--
``(A) a major market disturbance characterized by or
constituting--
``(i) sudden and excessive fluctuations of securities
prices generally, or a substantial threat thereof, that
threaten fair and orderly markets; or
``(ii) a substantial disruption of the safe or efficient
operation of the national system for clearance and settlement
of transactions in securities, or a substantial threat
thereof; or
``(B) a major disturbance that substantially disrupts, or
threatens to substantially disrupt--
``(i) the functioning of securities markets, investment
companies, or any other significant portion or segment of the
securities markets; or
``(ii) the transmission or processing of securities
transactions.''; and
(3) in section 21(h)(2) (15 U.S.C. 78u(h)(2)), by striking
``section 18(c) of the Public Utility Holding Company Act of
1935,''.
(b) Trust Indenture Act of 1939.--The Trust Indenture Act
of 1939 (15 U.S.C. 77aaa et seq.) is amended--
(1) in section 303 (15 U.S.C. 77ccc), by striking paragraph
(17) and inserting the following:
``(17) The terms `Securities Act of 1933' and `Securities
Exchange Act of 1934' shall be deemed to refer, respectively,
to such Acts, as amended, whether amended prior to or after
the enactment of this title.'';
(2) in section 308 (15 U.S.C. 77hhh), by striking
``Securities Act of 1933, the Securities Exchange Act of
1934, or the Public Utility Holding Company Act of 1935''
each place that term appears and inserting ``Securities Act
of 1933 or the Securities Exchange Act of 1934'';
(3) in section 310 (15 U.S.C. 77jjj), by striking
subsection (c);
(4) in section 311 (15 U.S.C. 77kkk), by striking
subsection (c);
(5) in section 323(b) (15 U.S.C. 77www(b)), by striking
``Securities Act of 1933, or the Securities Exchange Act of
1934, or the Public Utility Holding Company Act of 1935'' and
inserting ``Securities Act of 1933 or the Securities Exchange
Act of 1934''; and
(6) in section 326 (15 U.S.C. 77zzz), by striking
``Securities Act of 1933, or the Securities Exchange Act of
1934, or the Public Utility Holding Company Act of 1935,''
and inserting ``Securities Act of 1933 or the Securities
Exchange Act of 1934''.
(c) Investment Company Act of 1940.--The Investment Company
Act of 1940 (15 U.S.C. 80a-1 et seq.) is amended--
(1) in section 2(a)(44) (15 U.S.C. 80a-2(a)(44)), by
striking `` `Public Utility Holding Company Act of 1935','';
(2) in section 3(c) (15 U.S.C. 80a-3(c)), by striking
paragraph (8) and inserting the following:
``(8) [Repealed]'';
(3) in section 38(b) (15 U.S.C. 80a-37(b)), by striking
``the Public Utility Holding Company Act of 1935,''; and
(4) in section 50 (15 U.S.C. 80a-49), by striking ``the
Public Utility Holding Company Act of 1935,''.
(d) Investment Advisers Act of 1940.--Section 202(a)(21) of
the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(21))
is amended by striking `` `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.

(a) In General.--Section 38(k) of the Federal Deposit
Insurance Act (U.S.C. 1831o(k)) is amended--
(1) in paragraph (2), by striking subparagraph (B) and
inserting the following:

[[Page S2931]]

``(B) Material loss defined.--The term `material loss'
means any estimated loss in excess of--
``(i) $100,000,000, if the loss occurs during the period
beginning on September 30, 2009, and ending on December 31,
2010;
``(ii) $75,000,000, if the loss occurs during the period
beginning on January 1, 2011, and ending on December 31,
2011; and
``(iii) $50,000,000, if the loss occurs on or after January
1, 2012.'';
(2) in paragraph (4)(A) by striking ``the report'' and
inserting ``any report on losses required under this
subsection,'';
(3) by striking paragraph (6);
(4) by redesignating paragraph (5) as paragraph (6); and
(5) by inserting after paragraph (4) the following:
``(5) Losses that are not material.--
``(A) Semiannual report.--For the 6-month period ending on
March 31, 2010, and each 6-month period thereafter, the
Inspector General of each Federal banking agency shall--
``(i) identify losses that the Inspector General estimates
have been incurred by the Deposit Insurance Fund during that
6-month period, with respect to the insured depository
institutions supervised by the Federal banking agency;
``(ii) for each loss incurred by the Deposit Insurance Fund
that is not a material loss, determine--

``(I) the grounds identified by the Federal banking agency
or State bank supervisor for appointing the Corporation as
receiver under section 11(c)(5); and
``(II) whether any unusual circumstances exist that might
warrant an in-depth review of the loss; and

``(iii) prepare and submit a written report to the
appropriate Federal banking agency and to Congress on the
results of any determination by the Inspector General,
including--

``(I) an identification of any loss that warrants an in-
depth review, together with the reasons why such review is
warranted, or, if the Inspector General determines that no
review is warranted, an explanation of such determination;
and
``(II) for each loss identified under subclause (I) that
warrants an in-depth review, the date by which such review,
and a report on such review prepared in a manner consistent
with reports under paragraph (1)(A), will be completed and
submitted to the Federal banking agency and Congress.

``(B) Deadline for semiannual report.--The Inspector
General of each Federal banking agency shall--
``(i) submit each report required under paragraph (A)
expeditiously, and not later than 90 days after the end of
the 6-month period covered by the report; and
``(ii) provide a copy of the report required under
paragraph (A) to any Member of Congress, upon request.''.
(b) Technical and Conforming Amendment.--The heading for
subsection (k) of section 38 of the Federal Deposit Insurance
Act (U.S.C. 1831o(k)) is amended to read as follows:
``(k) Reviews Required When Deposit Insurance Fund Incurs
Losses.--''.

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.

(a) In General.--Section 216(j) of the Federal Credit Union
Act (12 U.S.C. 1790d(j)) is amended to read as follows:
``(j) Reviews Required When Share Insurance Fund
Experiences Losses.--
``(1) In general.--If the Fund incurs a material loss with
respect to an insured credit union, the Inspector General of
the Board shall--
``(A) submit to the Board a written report reviewing the
supervision of the credit union by the Administration
(including the implementation of this section by the
Administration), which shall include--
``(i) a description of the reasons why the problems of the
credit union resulted in a material loss to the Fund; and
``(ii) recommendations for preventing any such loss in the
future; and
``(B) submit a copy of the report under subparagraph (A)
to--
``(i) the Comptroller General of the United States;
``(ii) the Corporation;
``(iii) in the case of a report relating to a State credit
union, the appropriate State supervisor; and
``(iv) to any Member of Congress, upon request.
``(2) Material loss defined.--For purposes of determining
whether the Fund has incurred a material loss with respect to
an insured credit union, a loss is material if it exceeds the
sum of--
``(A) $25,000,000; and
``(B) an amount equal to 10 percent of the total assets of
the credit union on the date on which the Board initiated
assistance under section 208 or was appointed liquidating
agent.
``(3) Public disclosure required.--
``(A) In general.--The Board shall disclose a report under
this subsection, upon request under section 552 of title 5,
United States Code, without excising--
``(i) any portion under section 552(b)(5) of title 5,
United States Code; or
``(ii) any information about the insured credit union
(other than trade secrets) under section 552(b)(8) of title
5, United States Code.
``(B) Rule of construction.--Subparagraph (A) may not be
construed as requiring the agency to disclose the name of any
customer of the insured credit union (other than an
institution-affiliated party), or information from which the
identity of such customer could reasonably be ascertained.
``(4) Losses that are not material.--
``(A) Semiannual report.--For the 6-month period ending on
March 31, 2010, and each 6-month period thereafter, the
Inspector General of the Board shall--
``(i) identify any losses that the Inspector General
estimates were incurred by the Fund during such 6-month
period, with respect to insured credit unions;
``(ii) for each loss to the Fund that is not a material
loss, determine--

``(I) the grounds identified by the Board or the State
official having jurisdiction over a State credit union for
appointing the Board as the liquidating agent for any Federal
or State credit union; and
``(II) whether any unusual circumstances exist that might
warrant an in-depth review of the loss; and

``(iii) prepare and submit a written report to the Board
and to Congress on the results of the determinations of the
Inspector General that includes--

``(I) an identification of any loss that warrants an in-
depth review, and the reasons such review is warranted, or if
the Inspector General determines that no review is warranted,
an explanation of such determination; and
``(II) for each loss identified in subclause (I) that
warrants an in-depth review, the date by which such review,
and a report on the review prepared in a manner consistent
with reports under paragraph (1)(A), will be completed.

``(B) Deadline for semiannual report.--The Inspector
General of the Board shall--
``(i) submit each report required under subparagraph (A)
expeditiously, and not later than 90 days after the end of
the 6-month period covered by the report; and
``(ii) provide a copy of the report required under
subparagraph (A) to any Member of Congress, upon request.
``(5) GAO review.--The Comptroller General of the United
States shall, under such conditions as the Comptroller
General determines to be appropriate--
``(A) review each report made under paragraph (1),
including the extent to which the Inspector General of the
Board complied with the requirements under section 8L of the
Inspector General Act of 1978 (5 U.S.C. App.) with respect to
each such report; and
``(B) recommend improvements to the supervision of insured
credit unions (including improvements relating to the
implementation of this section).''.

SEC. 989. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON
PROPRIETARY TRADING.

(a) Definitions.--In this section--
(1) the term ``covered entity'' means--
(A) an insured depository institution, an affiliate of an
insured depository institution, a bank holding company, a
financial holding company, or a subsidiary of a bank holding
company or a financial holding company, as those terms are
defined in the Bank Holding Company Act of 1956 (12 U.S.C.
1841 et seq.); and
(B) any other entity, as the Comptroller General of the
United States may determine; and
(2) the term ``proprietary trading'' means the act of a
covered entity investing as a principal in securities,
commodities, derivatives, hedge funds, private equity firms,
or such other financial products or entities as the
Comptroller General may determine.
(b) Study.--
(1) In general.--The Comptroller General of the United
States shall conduct a study regarding the risks and
conflicts associated with proprietary trading by and within
covered entities, including an evaluation of--
(A) whether proprietary trading presents a material
systemic risk to the stability of the United States financial
system, and if so, the costs and benefits of options for
mitigating such systemic risk;
(B) whether proprietary trading presents material risks to
the safety and soundness of the covered entities that engage
in such activities, and if so, the costs and benefits of
options for mitigating such risks;
(C) whether proprietary trading presents material conflicts
of interest between covered entities that engage in
proprietary trading and the clients of the institutions who
use the firm to execute trades or who rely on the firm to
manage assets, and if so, the costs and benefits of options
for mitigating such conflicts of interest;
(D) whether adequate disclosure regarding the risks and
conflicts of proprietary trading is provided to the
depositors, trading and asset management clients, and
investors of covered entities that engage in proprietary
trading, and if not, the costs and benefits of options for
the improvement of such disclosure; and
(E) whether the banking, securities, and commodities
regulators of institutions that engage in proprietary trading
have in place adequate systems and controls to monitor and
contain any risks and conflicts of interest related to
proprietary trading, and if not, the costs and benefits of
options for the improvement of such systems and controls.
(2) Considerations.--In carrying out the study required
under paragraph (1), the Comptroller General shall consider--
(A) current practice relating to proprietary trading;

[[Page S2932]]

(B) the advisability of a complete ban on proprietary
trading;
(C) limitations on the scope of activities that covered
entities may engage in with respect to proprietary trading;
(D) the advisability of additional capital requirements for
covered entities that engage in proprietary trading;
(E) enhanced restrictions on transactions between
affiliates related to proprietary trading;
(F) enhanced accounting disclosures relating to proprietary
trading;
(G) enhanced public disclosure relating to proprietary
trading; and
(H) any other options the Comptroller General deems
appropriate.
(c) Report to Congress.--Not later than 15 months after the
date of enactment of this Act, the Comptroller General shall
submit a report to Congress on the results of the study
conducted under subsection (b).
(d) Access by Comptroller General.--For purposes of
conducting the study required under subsection (b), the
Comptroller General shall have access, upon request, to any
information, data, schedules, books, accounts, financial
records, reports, files, electronic communications, or other
papers, things, or property belonging to or in use by a
covered entity that engages in proprietary trading, and to
the officers, directors, employees, independent public
accountants, financial advisors, staff, and agents and
representatives of a covered entity (as related to the
activities of the agent or representative on behalf of the
covered entity), at such reasonable times as the Comptroller
General may request. The Comptroller General may make and
retain copies of books, records, accounts, and other records,
as the Comptroller General deems appropriate.
(e) Confidentiality of Reports.--
(1) In general.--Except as provided in paragraph (2), the
Comptroller General may not disclose information regarding--
(A) any proprietary trading activity of a covered entity,
unless such information is disclosed at a level of generality
that does not reveal the investment or trading position or
strategy of the covered entity for any specific security,
commodity, derivative, or other investment or financial
product; or
(B) any individual interviewed by the Comptroller General
for purposes of the study under subsection (b), unless such
information is disclosed at a level of generality that does
not reveal--
(i) the name of or identifying details relating to such
individual; or
(ii) in the case of an individual who is an employee of a
third party that provides professional services to a covered
entity believed to be engaged in proprietary trading, the
name of or any identifying details relating to such third
party.
(2) Exceptions.--The Comptroller General may disclose the
information described in paragraph (1)--
(A) to a department, agency, or official of the Federal
Government, for official use, upon request;
(B) to a committee of Congress, upon request; and
(C) to a court, upon an order of such court.

SEC. 989A. SENIOR INVESTOR PROTECTIONS.

(a) Definitions.--As used in this section--
(1) the term ``eligible entity'' means--
(A) a securities commission (or any agency or office
performing like functions) of a State that the Office
determines has adopted rules on the appropriate use of
designations in the offer or sale of securities or investment
advice that meet or exceed the minimum requirements of the
NASAA Model Rule on the Use of Senior-Specific Certifications
and Professional Designations (or any successor thereto);
(B) the insurance commission (or any agency or office
performing like functions) of any State that the Office
determines has--
(i) adopted rules on the appropriate use of designations in
the sale of insurance products that, to the extent
practicable, conform to the minimum requirements of the
National Association of Insurance Commissioners Model
Regulation on the Use of Senior-Specific Certifications and
Professional Designations in the Sale of Life Insurance and
Annuities (or any successor thereto); and
(ii) adopted rules with respect to fiduciary or suitability
requirements in the sale of annuities that meet or exceed the
minimum requirements established by the Suitability in
Annuity Transactions Model Regulation of the National
Association of Insurance Commissioners (or any successor
thereto); or
(C) a consumer protection agency of any State, if--
(i) the securities commission (or any agency or office
performing like functions) of the State is eligible under
subparagraph (A); or
(ii) the insurance commission (or any agency or office
performing like functions) of the State is eligible under
subparagraph (B);
(2) the term ``financial product'' means a security, an
insurance product (including an insurance product that pays a
return, whether fixed or variable), a bank product, and a
loan product;
(3) the term ``misleading designation''--
(A) means a certification, professional designation, or
other purported credential that indicates or implies that a
salesperson or adviser has special certification or training
in advising or servicing seniors; and
(B) does not include a certification, professional
designation, license, or other credential that--
(i) was issued by or obtained from an academic institution
having regional accreditation;
(ii) meets the standards for certifications, licenses, and
professional designations outlined by the NASAA Model Rule on
the Use of Senior-Specific Certifications and Professional
Designations in the Sale of Life Insurance and Annuities,
adopted by the National Association of Insurance
Commissioners (or any successor thereto); or
(iii) was issued by or obtained from a State;
(4) the term ``misleading or fraudulent marketing'' means
the use of a misleading designation by a person that sells to
or advises a senior in connection with the sale of a
financial product;
(5) the term ``NASAA'' means the North American Securities
Administrators Association;
(6) the term ``Office'' means the Office of Financial
Literacy of the Bureau; and
(7) the term ``senior'' means any individual who has
attained the age of 62 years or older.
(b) Grants to States for Enhanced Protection of Seniors
From Being Misled by False Designations.--The Office shall
establish a program under which the Office may make grants to
States or eligible entities--
(1) to hire staff to identify, investigate, and prosecute
(through civil, administrative, or criminal enforcement
actions) cases involving misleading or fraudulent marketing;
(2) to fund technology, equipment, and training for
regulators, prosecutors, and law enforcement officers, in
order to identify salespersons and advisers who target
seniors through the use of misleading designations;
(3) to fund technology, equipment, and training for
prosecutors to increase the successful prosecution of
salespersons and advisers who target seniors with the use of
misleading designations;
(4) to provide educational materials and training to
regulators on the appropriateness of the use of designations
by salespersons and advisers in connection with the sale and
marketing of financial products;
(5) to provide educational materials and training to
seniors to increase awareness and understanding of misleading
or fraudulent marketing;
(6) to develop comprehensive plans to combat misleading or
fraudulent marketing of financial products to seniors; and
(7) to enhance provisions of State law to provide
protection for seniors against misleading or fraudulent
marketing.
(c) Applications.--A State or eligible entity desiring a
grant under this section shall submit an application to the
Office, in such form and in such a manner as the Office may
determine, that includes--
(1) a proposal for activities to protect seniors from
misleading or fraudulent marketing that are proposed to be
funded using a grant under this section, including--
(A) an identification of the scope of the problem of
misleading or fraudulent marketing in the State;
(B) a description of how the proposed activities would--
(i) protect seniors from misleading or fraudulent marketing
in the sale of financial products, including by proactively
identifying victims of misleading and fraudulent marketing
who are seniors;
(ii) assist in the investigation and prosecution of those
using misleading or fraudulent marketing; and
(iii) discourage and reduce cases of misleading or
fraudulent marketing; and
(C) a description of how the proposed activities would be
coordinated with other State efforts; and
(2) any other information, as the Office determines is
appropriate.
(d) Performance Objectives and Reporting Requirements.--The
Office may establish such performance objectives and
reporting requirements for States and eligible entities
receiving a grant under this section as the Office determines
are necessary to carry out and assess the effectiveness of
the program under this section.
(e) Maximum Amount.--The amount of a grant under this
section may not exceed--
(1) $500,000 for each of 3 consecutive fiscal years, if the
recipient is a State, or an eligible entity of a State, that
has adopted rules--
(A) on the appropriate use of designations in the offer or
sale of securities or investment advice that meet or exceed
the minimum requirements of the NASAA Model Rule on the Use
of Senior-Specific Certifications and Professional
Designations (or any successor thereto);
(B) on the appropriate use of designations in the sale of
insurance products that, to the extent practicable, conform
to the minimum requirements of the National Association of
Insurance Commissioners Model Regulation on the Use of
Senior-Specific Certifications and Professional Designations
in the Sale of Life Insurance and Annuities (or any successor
thereto); and
(C) with respect to fiduciary or suitability requirements
in the sale of annuities that meet or exceed the minimum
requirements established by the Suitability in Annuity
Transactions Model Regulation of the National Association of
Insurance Commissioners (or any successor thereto); and
(2) $100,000 for each of 3 consecutive fiscal years, if the
recipient is a State, or an eligible entity of a State, that
has adopted--
(A) rules on the appropriate use of designations in the
offer or sale of securities or investment advice that meet or
exceed the minimum requirements of the NASAA Model

[[Page S2933]]

Rule on the Use of Senior-Specific Certifications and
Professional Designations (or any successor thereto); or
(B) rules--
(i) on the appropriate use of designations in the sale of
insurance products that, to the extent practicable, conform
to the minimum requirements of the National Association of
Insurance Commissioners Model Regulation on the Use of
Senior-Specific Certifications and Professional Designations
in the Sale of Life Insurance and Annuities (or any successor
thereto); and
(ii) with respect to fiduciary or suitability requirements
in the sale of annuities that meet or exceed the minimum
requirements established by the Suitability in Annuity
Transactions Model Regulation of the National Association of
Insurance Commissioners (or any successor thereto).
(f) Subgrants.--A State or eligible entity that receives a
grant under this section may make a subgrant, as the State or
eligible entity determines is necessary to carry out the
activities funded using a grant under this section.
(g) Reapplication.--A State or eligible entity that
receives a grant under this section may reapply for a grant
under this section, notwithstanding the limitations on grant
amounts under subsection (e).
(h) Authorization of Appropriations.--There are authorized
to be appropriated to carry out this section, $8,000,000 for
each of fiscal years 2011 through 2015.

SEC. 989B. CHANGES IN APPOINTMENT OF CERTAIN INSPECTORS
GENERAL.

(a) Elevation of Certain Inspectors General to Appointment
Pursuant to Section 3 of the Inspector General Act of 1978.--
(1) Inclusion in certain definitions.--Section 12 of the
Inspector General Act of 1978 (5 U.S.C. App.) is amended--
(A) in paragraph (1), by striking ``or the Federal
Cochairpersons of the Commissions established under section
15301 of title 40, United States Code;'' and inserting ``the
Federal Cochairpersons of the Commissions established under
section 15301 of title 40, United States Code; the Chairman
of the Board of Governors of the Federal Reserve System; the
Chairman of the Commodity Futures Trading Commission; the
Chairman of the National Credit Union Administration; the
Chairman of the Board of Directors of the Pension Benefit
Guaranty Corporation; the Chairman of the Securities and
Exchange Commission; or the Director of the Bureau of
Consumer Financial Protection;''; and
(B) in paragraph (2), by striking ``or the Commissions
established under section 15301 of title 40, United States
Code,'' and inserting ``the Commissions established under
section 15301 of title 40, United States Code, the Board of
Governors of the Federal Reserve System, the Commodity
Futures Trading Commission, the National Credit Union
Administration, the Pension Benefit Guaranty Corporation, the
Securities and Exchange Commission, or the Director of the
Bureau of Consumer Financial Protection,''.
(2) Exclusion from definition of designated federal
entity.--Section 8G(a)(2) of the Inspector General Act of
1978 (5 U.S.C. App.) is amended--
(A) by striking ``the Board of Governors of the Federal
Reserve System,'';
(B) by striking ``the Commodity Futures Trading
Commission,'';
(C) by striking ``the National Credit Union
Administration,''; and
(D) by striking ``the Pension Benefit Guaranty Corporation,
the Securities and Exchange Commission,''.
(b) Continuation of Provisions Relating to Personnel.--
(1) In general.--The Inspector General Act of 1978 (5
U.S.C. App.) is amended by inserting after section 8L the
following:

``SEC. 8M. SPECIAL PROVISIONS CONCERNING CERTAIN
ESTABLISHMENTS.

``(a) Definition.--For purposes of this section, the term
`covered establishment' means the Board of Governors of the
Federal Reserve System, the Commodity Futures Trading
Commission, the National Credit Union Administration, the
Pension Benefit Guaranty Corporation, and the Securities and
Exchange Commission.
``(b) Provisions Relating to All Covered Establishments.--
``(1) Provisions relating to inspectors general.--In the
case of the Inspector General of a covered establishment,
subsections (b) and (c) of section 4 of the Inspector General
Reform Act of 2008 (Public Law 110-409; 122 Stat. 4304) shall
apply in the same manner as if such covered establishment
were a designated Federal entity under section 8G of this
Act. An Inspector General who is subject to the preceding
sentence shall not be subject to section 3(e) of this Act.
``(2) Provisions relating to other personnel.--
Notwithstanding paragraphs (7) and (8) of section 6(a), the
Inspector General of a covered establishment may select,
appoint, and employ such officers and employees as may be
necessary for carrying out the functions, powers, and duties
of the Office of Inspector General of the covered
establishment and to obtain the temporary or intermittent
services of experts or consultants or an organization of
experts or consultants, subject to the applicable laws and
regulations that govern such selections, appointments, and
employment, and the obtaining of such services, within the
covered establishment.
``(c) Provision Relating to the Board of Governors of the
Federal Reserve System.--The provisions of subsection (a) of
section 8D (other than the provisions of subparagraphs (A),
(B), (C), and (E) of paragraph (1) of such subsection (a))
shall apply to the Inspector General of the Board of
Governors of the Federal Reserve System and the Chairman of
the Board of Governors of the Federal Reserve System in the
same manner as such provisions apply to the Inspector General
of the Department of the Treasury and the Secretary of the
Treasury, respectively.''.
(2) Conforming amendment.--Paragraph (3) of section 8G(g)
of the Inspector General Act of 1978 (5 U.S.C. App.) is
repealed.
(c) Corrective Responses by Heads of Certain Establishments
to Deficiencies Identified by Inspectors General.--The
Chairman of the Board of Governors, the Chairman of the
Commodity Futures Trading Commission, the Chairman of the
National Credit Union Administration, the Chairman of the
Board of Directors of the Pension Benefit Guaranty
Corporation, and the Chairman of the Commission shall each--
(1) take action to address deficiencies identified by a
report or investigation of the Inspector General of the
establishment concerned; or
(2) certify to the Senate and the House of Representatives
that no action is necessary or appropriate in connection with
a deficiency described in paragraph (1).
(d) Effective Date; Transition Rule.--
(1) Effective date.--This section and the amendments made
by this section shall take effect 30 days after the date of
enactment of this Act.
(2) Transition rule.--An individual serving as Inspector
General of the Board of Governors, the Commodity Futures
Trading Commission, the National Credit Union Administration,
the Pension Benefit Guaranty Corporation, or the Commission
on the effective date of this section pursuant to an
appointment made under section 8G of the Inspector General
Act of 1978 (5 U.S.C. App.)--
(A) may continue so serving until the President makes an
appointment under section 3(a) of such Act with respect to
the Board of Governors, the Commodity Futures Trading
Commission, the National Credit Union Administration, the
Pension Benefit Guaranty Corporation, or the Commission, as
the case may be, consistent with the amendments made by
subsection (a); and
(B) shall, while serving under subparagraph (A)--
(i) remain subject to the provisions of section 8G of such
Act that applied with respect to the Inspector General of the
Board of Governors, the Commodity Futures Trading Commission,
the National Credit Union Administration, the Pension Benefit
Guaranty Corporation, or the Commission, as the case may be,
on the day before the effective date of this section; and
(ii) suffer no reduction in pay.

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

SEC. 991. SECURITIES AND EXCHANGE COMMISSION SELF-FUNDING.

(a) Self-funding Authority.--Section 4 of the Securities
Exchange Act of 1934 (15 U.S.C. 78d) is amended--
(1) in subsection (c), in the second sentence, by striking
``credited to the appropriated funds of the Commission'' and
inserting ``deposited in the account described in subsection
(i)(4)'';
(2) in subsection (f), in the second sentence, by striking
``considered a reimbursement to the appropriated funds of the
Commission'' and inserting ``deposited in the account
described in subsection (i)(4)''; and
(3) by adding at the end the following:
``(i) Funding of the Commission.--
``(1) Budget.--For each fiscal year, the Chairman of the
Commission shall prepare and submit to Congress a budget to
Congress. Such budget shall be submitted at the same time the
President submits a budget of the United States to Congress
for such fiscal year. The budget submitted by the Chairman of
the Commission pursuant to this paragraph shall not be
considered a request for appropriations.
``(2) Treasury payment.--
``(A) On the first day of each fiscal year, the Treasury
shall pay into the account described in paragraph (4) an
amount equal to the budget submitted by the Chairman of the
Commission pursuant to paragraph (1) for such fiscal year.
``(B) At or prior to the end of each fiscal year, the
Commission shall pay to the Treasury from fees and
assessments deposited in the account described in paragraph
(4) an amount equal to the amount paid by the Treasury
pursuant to subparagraph (A) for such fiscal year, unless
there are not sufficient fees and assessments deposited in
such account at or prior to the end of the fiscal year to
make such payment, in which case the Commission shall make
such payment in a subsequent fiscal year.
``(3) Obligations and expenses.--
``(A) In general.--The Commission shall determine and
prescribe the manner in which--
``(i) the obligations of the Commission shall be incurred;
and
``(ii) the disbursements and expenses of the Commission
allowed and paid.
``(B) Insufficient funds.--If, in the course of any fiscal
year, the Chairman of the Commission determines that, due to
unforeseen circumstances, the obligations of the Commission
will exceed those provided for in the budget submitted under
paragraph (1), the

[[Page S2934]]

Chairman of the Commission may notify Congress of the amount
and expected uses of the additional obligations.
``(C) Authority to incur excess obligations.--The
Commission may incur obligations in excess of the budget
submitted under paragraph (1) from amounts available in the
account described in paragraph (4).
``(D) Rule of construction.--Any notification to Congress
under this paragraph shall not be considered a request for
appropriations.
``(4) Account.--
``(A) Establishment.--Fees and assessments collected under
this title, section 6(b) of the Securities Act of 1933 (15
U.S.C. 77f(b)), and section 24(f) of the Investment Company
Act of 1940 (15 U.S.C. 80a-24(f)) and payments made by the
Treasury pursuant to paragraph (2)(A) for any fiscal year
shall be deposited into an account established at any regular
Government depositary or any State or national bank.
``(B) Rule of construction.--Any amounts deposited into the
account established under subparagraph (A) shall not be
construed to be Government funds or appropriated monies.
``(C) No apportionment.--Any amounts deposited into the
account established under subparagraph (A) shall not be
subject to apportionment for the purpose of chapter 15 of
title 31, United States Code, or under any other authority.
``(5) Use of account funds.--
``(A) Permissible uses.--Amounts available in the account
described in paragraph (4) may be withdrawn by the Commission
and used for the purposes described in paragraphs (2) and
(3).
``(B) Impermissible use.--Except as provided in paragraph
(6), no amounts available in the account described in
paragraph (4) shall be deposited and credited as general
revenue of the Treasury.
``(6) Excess funds.--If, at the end of any fiscal year and
after all payments have been made to the Treasury pursuant to
paragraph (2)(B) for such fiscal year and all prior fiscal
years, the balance of the account described in paragraph (4)
exceeds 25 percent of the budget of the Commission for the
following fiscal year, the amount by which the balance
exceeds 25 percent of such budget shall be credited as
general revenue of the Treasury.''.
(b) Conforming Amendments to Transaction Fee Provisions.--
Section 31 of the Securities Exchange Act of 1934 (15 U.S.C.
78ee) is amended--
(1) by amending subsection (a) to read as follows:
``(a) Recovery of Costs and Expenses.--
``(1) In general.--The Commission shall, in accordance with
this section, collect transaction fees and assessments that
are designed--
``(A) to recover the reasonable costs and expenses of the
Commission, as set forth in the annual budget of the
Commission; and
``(B) to provide funds necessary to maintain a reserve.
``(2) Overpayments.--The authority to collect transaction
fees and assessments in accordance with this section shall
include the authority to offset from such collection any
overpayment of transaction fees or assessments, regardless of
the fiscal year in which such overpayment is made.'';
(2) in subsection (e)(2), by striking ``September 30'' and
inserting ``September 25'';
(3) in subsection (g), by striking ``April 30'' and
inserting ``August 31'';
(4) by amending subsection (i) to read as follows:
``(i) Fee Collections.--Fees and assessments collected
pursuant to this section shall be deposited and credited in
accordance with section 4(g) of this title.'';
(5) by amending subsection (j) to read as follows:
``(j) Adjustments to Transaction Fee Rates.--
``(1) Annual adjustment.--For each fiscal year, the
Commission shall by order adjust each of the rates applicable
under subsections (b) and (c) for such fiscal year to a
uniform adjusted rate that, when applied to the baseline
estimate of the aggregate dollar amount of sales for such
fiscal year, is reasonably likely to produce aggregate fee
collections under this section (including assessments
collected under subsection (d)) that are equal to the budget
of the Commission for such fiscal year, plus amounts
necessary to maintain a reserve.
``(2) Mid-year adjustment.--For each fiscal year, the
Commission shall determine, by March 1 of such fiscal year,
whether, based on the actual aggregate dollar volume of sales
during the first 4 months of such fiscal year, the baseline
estimate of the aggregate dollar volume of sales used under
paragraph (1) for such fiscal year is reasonably likely to be
10 percent (or more) greater or less than the actual
aggregate dollar volume of sales for such fiscal year. If the
Commission so determines, the Commission shall by order, not
later than March 1, adjust each of the rates applicable under
subsections (b) and (c) for such fiscal year to a uniform
adjusted rate that, when applied to the revised estimate of
the aggregate dollar amount of sales for the remainder of
such fiscal year, is reasonably likely to produce aggregate
fee collections under this section (including fees estimated
to be collected under subsections (b) and (c) during such
fiscal year prior to the effective date of the new uniform
adjusted rate and assessments collected under subsection (d))
that are equal to the budget of the Commission for such
fiscal year, plus amounts necessary to maintain a reserve. In
making such revised estimate, the Commission shall, after
consultation with the Congressional Budget Office and the
Office of Management and Budget, use the same methodology
required by paragraph (4).
``(3) Review and effective date.--In exercising its
authority under this subsection, the Commission shall not be
required to comply with the provisions of section 553 of
title 5 United States Code. An adjusted rate prescribed under
paragraph (1) or (2) and published under subsection (g) shall
not be subject to judicial review. An adjusted rate
prescribed under paragraph (1) shall take effect on the first
day of the fiscal year to which such rate applies. An
adjusted rate prescribed under paragraph (2) shall take
effect on April 1 of the fiscal year to which such rate
applies.
``(4) Baseline estimate of the aggregate dollar amount of
sales.--For purposes of this subsection, the baseline
estimate of the aggregate dollar amount of sales for any
fiscal year is the baseline estimate of the aggregate dollar
amount of sales of securities (other than bonds, debentures,
other evidences of indebtedness, security futures products,
and options on securities indexes excluding a narrow-based
security index) to be transacted on each national securities
exchange and by or through any member of each national
securities association (otherwise than on a national
securities exchange) during such fiscal year as determined by
the Commission, after consultation with the Congressional
Budget Office and the Office of Management and Budget, using
the methodology required for making projections pursuant to
section 907 of title 2.''; and
(6) by striking subsections (k) and (l).
(c) Conforming Amendments to Registration Fee Provisions.--
(1) Section 6(b) of the securities act of 1933.--Section
6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)) is
amended--
(A) by striking ``offsetting'' each place that term appears
and inserting ``fee'';
(B) in paragraph (3), in the paragraph heading, by striking
``Offsetting'' and inserting ``Fee'';
(C) in paragraph (11)(A), in the subparagraph heading, by
striking ``offsetting'' and inserting ``fee'';
(D) by striking paragraphs (1), (3), (4), (6), (8), and
(9);
(E) by redesignating paragraph (2) as paragraph (1);
(F) in paragraph (1), as so redesignated, by striking ``(5)
or (6)'' and inserting ``(3)'';
(G) by inserting after paragraph (1), as so redesignated,
the following:
``(2) Fee collections.--Fees collected pursuant to this
subsection shall be deposited and credited in accordance with
section 4(i) of the Securities Exchange Act of 1934.'';
(H) by redesignating paragraph (5) as paragraph (3);
(I) in paragraph (3), as redesignated--
(i) by striking ``of the fiscal years 2003 through 2011''
and inserting ``fiscal year''; and
(ii) by striking ``paragraph (2)'' and inserting
``paragraph (1)'';
(J) by redesignating paragraph (7) as paragraph (4);
(K) by inserting after paragraph (4), as so redesignated,
the following:
``(5) Review and effective date.--In exercising its
authority under this subsection, the Commission shall not be
required to comply with the provisions of section 553 of
title 5, United States Code. An adjusted rate prescribed
under paragraph (3) and published under paragraph (6) shall
not be subject to judicial review. An adjusted rate
prescribed under paragraph (3) shall take effect on the first
day of the fiscal year to which such rate applies.'';
(L) by redesignating paragraphs (10) and (11), as
paragraphs (6) and (7);
(M) in paragraph (6), as redesignated, by striking ``April
30'' and inserting ``August 31''; and
(N) in paragraph (7), as redesignated--
(i) by striking ``of the fiscal years 2002 through 2011''
and inserting ``fiscal year''; and
(ii) by inserting at the end of the table in subparagraph
(A) the following:

----------------------------------------------------------------------------------------------------------------
2012 and each succeeding fiscal year                                     An amount that is equal to the target
fee collection amount for the prior
fiscal year adjusted by the rate of
inflation.
----------------------------------------------------------------------------------------------------------------

(2) Section 13(e) of the securities exchange act of 1934.--
Section 13(e) of the Securities Exchange Act of 1934 (15
U.S.C. 78m(e)) is amended--
(A) by striking ``offsetting'' each place that term appears
and inserting ``fee'';

[[Page S2935]]

(B) in paragraph (3) by striking ``paragraphs (5) and (6)''
and inserting ``paragraph (5)'';
(C) by amending paragraph (4) to read as follows:
``(4) Fee collections.--Fees collected pursuant to this
subsection shall be deposited and credited in accordance with
section 4(g) of this title.'';
(D) in paragraph (5), by striking ``of the fiscal years
2003 through 2011'' and inserting ``fiscal year'';
(E) by striking paragraphs (6), (7), and (8);
(F) by redesignating paragraph (7) as paragraph (6);
(G) by inserting after paragraph (6), as so redesignated,
the following:
``(7) Review and effective date.--In exercising its
authority under this subsection, the Commission shall not be
required to comply with the provisions of section 553 of
title 5. An adjusted rate prescribed under paragraph (5) and
published under paragraph (8) shall not be subject to
judicial review. An adjusted rate prescribed under paragraph
(5) shall take effect on the first day of the fiscal year to
which such rate applies.'';
(H) by striking paragraph (9);
(I) by redesignating paragraph (10) as paragraph (8); and
(J) in paragraph (8), as so redesignated, by striking
``6(b)(10)'' and inserting ``6(b)(6)''.
(3) Section 14 of the securities exchange act of 1934.--
Section 14(g) of the Securities Exchange Act of 1934 (15
U.S.C. 78n(g)) is amended--
(A) by striking the word ``offsetting'' each time that it
appears and inserting in its place the word ``fee'';
(B) in paragraph (1)(A), by striking ``paragraphs (5) and
(6)'' each time it appears and inserting ``paragraph (5)'';
(C) in paragraph (3), by striking ``paragraphs (5) and
(6)'' and inserting ``paragraph (5)'';
(D) by amending paragraph (4) to read as follows:
``(4) Fee collections.--Fees collected pursuant to this
subsection shall be deposited and credited in accordance with
section 4(g) of this title.'';
(E) in paragraph (5), by striking ``of the fiscal years
2003 through 2011'' and inserting ``fiscal year'';
(F) by striking paragraphs (6), (8), and (9);
(G) by redesignating paragraph (7) as paragraph (6);
(H) by inserting after paragraph (6), as so redesignated,
the following:
``(7) Review and effective date.--In exercising its
authority under this subsection, the Commission shall not be
required to comply with the provisions of section 553 of
title 5. An adjusted rate prescribed under paragraph (5) and
published under paragraph (8) shall not be subject to
judicial review. An adjusted rate prescribed under paragraph
(5) shall take effect on the first day of the fiscal year to
which such rate applies.'';
(I) by redesignating paragraphs (10) and (11) as paragraphs
(8) and (9), respectively; and
(J) in paragraph (9), as so redesignated, by striking
``6(b)(10)'' and inserting ``6(b)(7)''.
(d) Repeal of Authorization of Appropriations.--Section 35
of the Securities Exchange Act of 1934 (15 U.S.C. 78kk) is
repealed.
(e) Effective Date and Transition Provisions.--
(1) In general.--Except as provided in paragraphs (2) and
(3), the amendments made by this section shall be effective
on the first day of the fiscal year following the fiscal year
in which this Act is enacted.
(2) Transition period.--For the fiscal year following the
fiscal year in which this Act is enacted, the budget of the
Commission shall be deemed to be the budget submitted by the
Chairman of the Commission to the President for such fiscal
year in accordance with the provisions of section 1108 of
title 31, United States Code.
(3) Other provisions.--The amendments made by this section
to subsections (g) and (j)(1) of section 31 of the Securities
Exchange Act of 1934 (15 U.S.C. 78ee) shall be effective on
the date of enactment of this Act, and shall require the
Commission to make and publish an annual adjustment to the
fee rates applicable under subsections (b) and (c) of section
31 of the Securities Exchange Act of 1934 (15 U.S.C. 78ee)
for the fiscal year following the fiscal year in which this
Act is enacted. The adjusted rate described in the preceding
sentence shall supersede any previously published adjusted
rate applicable under subsections (b) and (c) of section 31
of the Securities Exchange Act of 1934 for the fiscal year
following the fiscal year in which this Act is enacted and
shall take effect on the first day of the fiscal year
following the fiscal year in which this Act is enacted,
except that, if this Act is enacted on or after August 31 and
on or prior to September 30, the adjusted rate described in
the first sentence shall be published not later than 15 days
after the date of enactment of this Act and take effect 30
days thereafter, and the Commission shall continue to collect
fees under subsections (b) and (c) of section 31 of the
Securities Exchange Act of 1934 at the rate in effect during
the preceding fiscal year until the adjusted rate is
effective.

TITLE X--BUREAU OF CONSUMER FINANCIAL PROTECTION

SEC. 1001. SHORT TITLE.

This title may be cited as the ``Consumer Financial
Protection Act of 2010''.

SEC. 1002. DEFINITIONS.

Except as otherwise provided in this title, for purposes of
this title, the following definitions shall apply:
(1) Affiliate.--The term ``affiliate'' means any person
that controls, is controlled by, or is under common control
with another person.
(2) Bureau.--The term ``Bureau'' means the Bureau of
Consumer Financial Protection.
(3) Business of insurance.--The term ``business of
insurance'' means the writing of insurance or the reinsuring
of risks by an insurer, including all acts necessary to such
writing or reinsuring and the activities relating to the
writing of insurance or the reinsuring of risks conducted by
persons who act as, or are, officers, directors, agents, or
employees of insurers or who are other persons authorized to
act on behalf of such persons.
(4) Consumer.--The term ``consumer'' means an individual or
an agent, trustee, or representative acting on behalf of an
individual.
(5) Consumer financial product or service.--The term
``consumer financial product or service'' means any financial
product or service that is described in one or more
categories under--
(A) paragraph (13) and is offered or provided for use by
consumers primarily for personal, family, or household
purposes; or
(B) clause (i), (iii), (ix), or (x) of paragraph (13)(A),
and is delivered, offered, or provided in connection with a
consumer financial product or service referred to in
subparagraph (A).
(6) Covered person.--The term ``covered person'' means--
(A) any person that engages in offering or providing a
consumer financial product or service; and
(B) any affiliate of a person described in subparagraph (A)
if such affiliate acts as a service provider to such person.
(7) Credit.--The term ``credit'' means the right granted by
a person to a consumer to defer payment of a debt, incur debt
and defer its payment, or purchase property or services and
defer payment for such purchase.
(8) Deposit-taking activity.--The term ``deposit-taking
activity'' means--
(A) the acceptance of deposits, maintenance of deposit
accounts, or the provision of services related to the
acceptance of deposits or the maintenance of deposit
accounts;
(B) the acceptance of funds, the provision of other
services related to the acceptance of funds, or the
maintenance of member share accounts by a credit union; or
(C) the receipt of funds or the equivalent thereof, as the
Bureau may determine by rule or order, received or held by a
covered person (or an agent for a covered person) for the
purpose of facilitating a payment or transferring funds or
value of funds between a consumer and a third party.
(9) Designated transfer date.--The term ``designated
transfer date'' means the date established under section
1062.
(10) Director.--The term ``Director'' means the Director of
the Bureau.
(11) Enumerated consumer laws.--The term ``enumerated
consumer laws'' means--
(A) the Alternative Mortgage Transaction Parity Act of 1982
(12 U.S.C. 3801 et seq.);
(B) the Consumer Leasing Act of 1976 (15 U.S.C. 1667 et
seq.);
(C) the Electronic Fund Transfer Act (15 U.S.C. 1693 et
seq.);
(D) the Equal Credit Opportunity Act (15 U.S.C. 1691 et
seq.);
(E) the Fair Credit Billing Act (15 U.S.C. 1666 et seq.);
(F) the Fair Credit Reporting Act (15 U.S.C. 1681 et seq.),
except with respect to sections 615(e) and 628 of that Act
(15 U.S.C. 1681m(e), 1681w);
(G) the Home Owners Protection Act of 1998 (12 U.S.C. 4901
et seq.);
(H) the Fair Debt Collection Practices Act (15 U.S.C. 1692
et seq.);
(I) subsections (c) through (f) of section 43 of the
Federal Deposit Insurance Act (12 U.S.C. 1831t(c)-(f));
(J) sections 502 through 509 of the Gramm-Leach-Bliley Act
(15 U.S.C. 6802-6809);
(K) the Home Mortgage Disclosure Act of 1975 (12 U.S.C.
2801 et seq.);
(L) the Home Ownership and Equity Protection Act of 1994
(15 U.S.C. 1601 note);
(M) the Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2601 et seq.);
(N) the S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C.
5101 et seq.);
(O) the Truth in Lending Act (15 U.S.C. 1601 et seq.); and
(P) the Truth in Savings Act (12 U.S.C. 4301 et seq.).
(12) Federal consumer financial law.--The term ``Federal
consumer financial law'' means the provisions of this title,
the enumerated consumer laws, the laws for which authorities
are transferred under subtitles F and H, and any rule or
order prescribed by the Bureau under this title, an
enumerated consumer law, or pursuant to the authorities
transferred under subtitles F and H.
(13) Financial product or service.--The term ``financial
product or service''--
(A) means--
(i) extending credit and servicing loans, including
acquiring, purchasing, selling, brokering, or other
extensions of credit (other than solely extending commercial
credit to a person who originates consumer credit
transactions);

[[Page S2936]]

(ii) extending or brokering leases of personal or real
property that are the functional equivalent of purchase
finance arrangements, if--

(I) the lease is on a non-operating basis;
(II) the initial term of the lease is at least 90 days; and
(III) in the case of a lease involving real property, at
the inception of the initial lease, the transaction is
intended to result in ownership of the leased property to be
transferred to the lessee, subject to standards prescribed by
the Bureau;

(iii) providing real estate settlement services or
performing appraisals of real estate or personal property;
(iv) engaging in deposit-taking activities, transmitting or
exchanging funds, or otherwise acting as a custodian of funds
or any financial instrument for use by or on behalf of a
consumer;
(v) selling, providing, or issuing stored value or payment
instruments, except that, in the case of a sale of, or
transaction to reload, stored value, only if the seller
exercises substantial control over the terms or conditions of
the stored value provided to the consumer where, for purposes
of this clause--

(I) a seller shall not be found to exercise substantial
control over the terms or conditions of the stored value if
the seller is not a party to the contract with the consumer
for the stored value product, and another person is
principally responsible for establishing the terms or
conditions of the stored value; and
(II) advertising the nonfinancial goods or services of the
seller on the stored value card or device is not in itself an
exercise of substantial control over the terms or conditions;

(vi) providing check cashing, check collection, or check
guaranty services;
(vii) providing payments or other financial data processing
products or services to a consumer by any technological
means, including processing or storing financial or banking
data for any payment instrument, or through any payments
systems or network used for processing payments data,
including payments made through an online banking system or
mobile telecommunications network, except that a person shall
not be deemed to be a covered person with respect to
financial data processing solely because the person--

(I) unknowingly or incidentally processes, stores, or
transmits over the Internet, telephone line, mobile network,
or any other mode of transmission, as part of a stream of
other types of data, financial data in a manner that such
data is undifferentiated from other types of data of the same
form that the person processes, stores, or transmits;
(II) is a merchant, retailer, or seller of any nonfinancial
good or service who engages in financial data processing by
transmitting or storing payments data about a consumer
exclusively for purpose of initiating payments instructions
by the consumer to pay such person for the purchase of, or to
complete a commercial transaction for, such nonfinancial good
or service sold directly by such person to the consumer; or
(III) provides access to a host server to a person for
purposes of enabling that person to establish and maintain a
website;

(viii) providing financial advisory services to consumers
on individual financial matters or relating to proprietary
financial products or services (other than by publishing any
bona fide newspaper, news magazine, or business or financial
publication of general and regular circulation, including
publishing market data, news, or data analytics or investment
information or recommendations that are not tailored to the
individual needs of a particular consumer), including--

(I) providing credit counseling to any consumer; and
(II) providing services to assist a consumer with debt
management or debt settlement, modifying the terms of any
extension of credit, or avoiding foreclosure;

(ix) collecting, analyzing, maintaining, or providing
consumer report information or other account information,
including information relating to the credit history of
consumers, used or expected to be used in connection with any
decision regarding the offering or provision of a consumer
financial product or service, except to the extent that--

(I) a person--

(aa) collects, analyzes, or maintains information that
relates solely to the transactions between a consumer and
such person; or
(bb) provides the information described in item (aa) to an
affiliate of such person; and

(II) the information described in subclause (I)(aa) is not
used by such person or affiliate in connection with any
decision regarding the offering or provision of a consumer
financial product or service to the consumer, other than
credit described in section 1027(a)(2)(A);

(x) collecting debt related to any consumer financial
product or service; and
(xi) such other financial product or service as may be
defined by the Bureau, by regulation, for purposes of this
title, if the Bureau finds that such financial product or
service is--

(I) entered into or conducted as a subterfuge or with a
purpose to evade any Federal consumer financial law; or
(II) permissible for a bank or for a financial holding
company to offer or to provide under any provision of a
Federal law or regulation applicable to a bank or a financial
holding company, and has, or likely will have, a material
impact on consumers; and

(B) does not include the business of insurance.
(14) Foreign exchange.--The term ``foreign exchange'' means
the exchange, for compensation, of currency of the United
States or of a foreign government for currency of another
government.
(15) Insured credit union.--The term ``insured credit
union'' has the same meaning as in section 101 of the Federal
Credit Union Act (12 U.S.C. 1752).
(16) Payment instrument.--The term ``payment instrument''
means a check, draft, warrant, money order, traveler's check,
electronic instrument, or other instrument, payment of funds,
or monetary value (other than currency).
(17) Person.--The term ``person'' means an individual,
partnership, company, corporation, association (incorporated
or unincorporated), trust, estate, cooperative organization,
or other entity.
(18) Person regulated by the commodity futures trading
commission.--The term ``person regulated by the Commodity
Futures Trading Commission'' means any person that is
registered, or required by statute or regulation to be
registered, with the Commodity Futures Trading Commission,
but only to the extent that the activities of such person are
subject to the jurisdiction of the Commodity Futures Trading
Commission under the Commodity Exchange Act.
(19) Person regulated by the commission.--The term ``person
regulated by the Commission'' means a person who is--
(A) a broker or dealer that is required to be registered
under the Securities Exchange Act of 1934;
(B) an investment adviser that is registered under the
Investment Advisers Act of 1940;
(C) an investment company that is required to be registered
under the Investment Company Act of 1940, and any company
that has elected to be regulated as a business development
company under that Act;
(D) a national securities exchange that is required to be
registered under the Securities Exchange Act of 1934;
(E) a transfer agent that is required to be registered
under the Securities Exchange Act of 1934;
(F) a clearing corporation that is required to be
registered under the Securities Exchange Act of 1934;
(G) any self-regulatory organization that is required to be
registered with the Commission;
(H) any nationally recognized statistical rating
organization that is required to be registered with the
Commission;
(I) any securities information processor that is required
to be registered with the Commission;
(J) any municipal securities dealer that is required to be
registered with the Commission;
(K) any other person that is required to be registered with
the Commission under the Securities Exchange Act of 1934; and
(L) any employee, agent, or contractor acting on behalf of,
registered with, or providing services to, any person
described in any of subparagraphs (A) through (K), but only
to the extent that any person described in any of
subparagraphs (A) through (K), or the employee, agent, or
contractor of such person, acts in a regulated capacity.
(20) Person regulated by a state insurance regulator.--The
term ``person regulated by a State insurance regulator''
means any person that is engaged in the business of insurance
and subject to regulation by any State insurance regulator,
but only to the extent that such person acts in such
capacity.
(21) Person that performs income tax preparation activities
for consumers.--The term ``person that performs income tax
preparation activities for consumers'' means--
(A) any tax return preparer (as defined in section
7701(a)(36) of the Internal Revenue Code of 1986), regardless
of whether compensated, but only to the extent that the
person acts in such capacity;
(B) any person regulated by the Secretary under section 330
of title 31, United States Code, but only to the extent that
the person acts in such capacity; and
(C) any authorized IRS e-file Providers (as defined for
purposes of section 7216 of the Internal Revenue Code of
1986), but only to the extent that the person acts in such
capacity.
(22) Prudential regulator.--The term ``prudential
regulator'' means--
(A) in the case of an insured depository institution, the
appropriate Federal banking agency, as that term is defined
in section 3 of the Federal Deposit Insurance Act; and
(B) in the case of an insured credit union, the National
Credit Union Administration.
(23) Related person.--The term ``related person''--
(A) shall apply only with respect to a covered person that
is not a bank holding company (as that term is defined in
section 2 of the Bank Holding Company Act of 1956), credit
union, or depository institution;
(B) shall be deemed to mean a covered person for all
purposes of any provision of Federal consumer financial law;
and
(C) means--
(i) any director, officer, or employee charged with
managerial responsibility for, or controlling shareholder of,
or agent for, such covered person;
(ii) any shareholder, consultant, joint venture partner, or
other person, as determined

[[Page S2937]]

by the Bureau (by rule or on a case-by-case basis) who
materially participates in the conduct of the affairs of such
covered person; and
(iii) any independent contractor (including any attorney,
appraiser, or accountant) who knowingly or recklessly
participates in any--

(I) violation of any provision of law or regulation; or
(II) breach of a fiduciary duty.

(24) Service provider.--
(A) In general.--The term ``service provider'' means any
person that provides a material service to a covered person
in connection with the offering or provision by such covered
person of a consumer financial product or service, including
a person that--
(i) participates in designing, operating, or maintaining
the consumer financial product or service; or
(ii) processes transactions relating to the consumer
financial product or service (other than unknowingly or
incidentally transmitting or processing financial data in a
manner that such data is undifferentiated from other types of
data of the same form as the person transmits or processes).
(B) Exceptions.--The term ``service provider'' does not
include a person solely by virtue of such person offering or
providing to a covered person--
(i) a support service of a type provided to businesses
generally or a similar ministerial service; or
(ii) time or space for an advertisement for a consumer
financial product or service through print, newspaper, or
electronic media.
(C) Rule of construction.--A person that is a service
provider shall be deemed to be a covered person to the extent
that such person engages in the offering or provision of its
own consumer financial product or service.
(25) State.--The term ``State'' means any State, territory,
or possession of the United States, the District of Columbia,
the Commonwealth of Puerto Rico, the Commonwealth of the
Northern Mariana Islands, Guam, American Samoa, or the United
States Virgin Islands or any federally recognized Indian
tribe, as defined by the Secretary of the Interior under
section 104(a) of the Federally Recognized Indian Tribe List
Act of 1994 (25 U.S.C. 479a-1(a)).
(26) Stored value.--The term ``stored value'' means funds
or monetary value represented in any electronic format,
whether or not specially encrypted, and stored or capable of
storage on electronic media in such a way as to be
retrievable and transferred electronically, and includes a
prepaid debit card or product, or any other similar product,
regardless of whether the amount of the funds or monetary
value may be increased or reloaded.
(27) Transmitting or exchanging funds.--The term
``transmitting or exchanging funds'' means receiving
currency, monetary value, or payment instruments from a
consumer for the purpose of exchanging or transmitting the
same by any means, including transmission by wire, facsimile,
electronic transfer, courier, the Internet, or through bill
payment services or through other businesses that facilitate
third-party transfers within the United States or to or from
the United States.

Subtitle A--Bureau of Consumer Financial Protection

SEC. 1011. ESTABLISHMENT OF THE BUREAU.

(a) Bureau Established.--There is established in the
Federal Reserve System the Bureau of Consumer Financial
Protection, which shall regulate the offering and provision
of consumer financial products or services under the Federal
consumer financial laws.
(b) Director and Deputy Director.--
(1) In general.--There is established the position of the
Director, who shall serve as the head of the Bureau.
(2) Appointment.--Subject to paragraph (3), the Director
shall be appointed by the President, by and with the advice
and consent of the Senate.
(3) Qualification.--The President shall nominate the
Director from among individuals who are citizens of the
United States.
(4) Compensation.--The Director shall be compensated at the
rate prescribed for level II of the Executive Schedule under
section 5313 of title 5, United States Code.
(5) Deputy director.--There is established the position of
Deputy Director, who shall--
(A) be appointed by the Director; and
(B) serve as acting Director in the absence or
unavailability of the Director.
(c) Term.--
(1) In general.--The Director shall serve for a term of 5
years.
(2) Expiration of term.--An individual may serve as
Director after the expiration of the term for which
appointed, until a successor has been appointed and
qualified.
(3) Removal for cause.--The President may remove the
Director for inefficiency, neglect of duty, or malfeasance in
office.
(d) Service Restriction.--No Director or Deputy Director
may hold any office, position, or employment in any Federal
reserve bank, Federal home loan bank, covered person, or
service provider during the period of service of such person
as Director or Deputy Director.
(e) Offices.--The principal office of the Bureau shall be
in the District of Columbia. The Director may establish
regional offices of the Bureau, including in cities in which
the Federal reserve banks, or branches of such banks, are
located, in order to carry out the responsibilities assigned
to the Bureau under the Federal consumer financial laws.

SEC. 1012. EXECUTIVE AND ADMINISTRATIVE POWERS.

(a) Powers of the Bureau.--The Bureau is authorized to
establish the general policies of the Bureau with respect to
all executive and administrative functions, including--
(1) the establishment of rules for conducting the general
business of the Bureau, in a manner not inconsistent with
this title;
(2) to bind the Bureau and enter into contracts;
(3) directing the establishment and maintenance of
divisions or other offices within the Bureau, in order to
carry out the responsibilities under the Federal consumer
financial laws, and to satisfy the requirements of other
applicable law;
(4) to coordinate and oversee the operation of all
administrative, enforcement, and research activities of the
Bureau;
(5) to adopt and use a seal;
(6) to determine the character of and the necessity for the
obligations and expenditures of the Bureau;
(7) the appointment and supervision of personnel employed
by the Bureau;
(8) the distribution of business among personnel appointed
and supervised by the Director and among administrative units
of the Bureau;
(9) the use and expenditure of funds;
(10) implementing the Federal consumer financial laws
through rules, orders, guidance, interpretations, statements
of policy, examinations, and enforcement actions; and
(11) performing such other functions as may be authorized
or required by law.
(b) Delegation of Authority.--The Director of the Bureau
may delegate to any duly authorized employee, representative,
or agent any power vested in the Bureau by law.
(c) Autonomy of the Bureau.--
(1) Coordination with the board of governors.--
Notwithstanding section 18 of the Federal Trade Commission
Act (15 U.S.C. 57a) and any other provision of law applicable
to the supervision or examination of persons with respect to
Federal consumer financial laws, the Board of Governors may
delegate to the Bureau the authorities to examine persons
subject to the jurisdiction of the Board of Governors for
compliance with the Federal consumer financial laws.
(2) Autonomy.--Notwithstanding the authorities granted to
the Board of Governors under the Federal Reserve Act, the
Board of Governors may not--
(A) intervene in any matter or proceeding before the
Director, including examinations or enforcement actions,
unless otherwise specifically provided by law;
(B) appoint, direct, or remove any officer or employee of
the Bureau; or
(C) merge or consolidate the Bureau, or any of the
functions or responsibilities of the Bureau, with any
division or office of the Board of Governors or the Federal
reserve banks.
(3) Rules and orders.--No rule or order of the Bureau shall
be subject to approval or review by the Board of Governors.
The Board of Governors may not delay or prevent the issuance
of any rule or order of the Bureau.
(4) Recommendations and testimony.--No officer or agency of
the United States shall have any authority to require the
Director or any other officer of the Bureau to submit
legislative recommendations, or testimony or comments on
legislation, to any officer or agency of the United States
for approval, comments, or review prior to the submission of
such recommendations, testimony, or comments to the Congress,
if such recommendations, testimony, or comments to the
Congress include a statement indicating that the views
expressed therein are those of the Director or such officer,
and do not necessarily reflect the views of the Board of
Governors or the President.

SEC. 1013. ADMINISTRATION.

(a) Personnel.--
(1) Appointment.--
(A) In general.--The Director may fix the number of, and
appoint and direct, all employees of the Bureau.
(B) Employees of the bureau.--The Director is authorized to
employ attorneys, compliance examiners, compliance
supervision analysts, economists, statisticians, and other
employees as may be deemed necessary to conduct the business
of the Bureau. Notwithstanding any other provision of law,
all such employees shall be appointed and compensated on
terms and conditions that are consistent with the terms and
conditions set forth in section 11(l) of the Federal Reserve
Act (12 U.S.C. 248(l)).
(2) Compensation.--The Director shall at all times provide
compensation and benefits to each class of employees that, at
a minimum, are equivalent to the compensation and benefits
then being provided by the Board of Governors for the
corresponding class of employees.
(b) Specific Functional Units.--
(1) Research.--The Director shall establish a unit whose
functions shall include researching, analyzing, and reporting
on--
(A) developments in markets for consumer financial products
or services, including market areas of alternative consumer
financial products or services with high growth rates and
areas of risk to consumers;
(B) access to fair and affordable credit for traditionally
underserved communities;
(C) consumer awareness, understanding, and use of
disclosures and communications regarding consumer financial
products or services;

[[Page S2938]]

(D) consumer awareness and understanding of costs, risks,
and benefits of consumer financial products or services; and
(E) consumer behavior with respect to consumer financial
products or services.
(2) Community affairs.--The Director shall establish a unit
whose functions shall include providing information,
guidance, and technical assistance regarding the offering and
provision of consumer financial products or services to
traditionally underserved consumers and communities.
(3) Collecting and tracking complaints.--
(A) In general.--The Director shall establish a unit whose
functions shall include establishing a single, toll-free
telephone number, a website, and a database to facilitate the
centralized collection of, monitoring of, and response to
consumer complaints regarding consumer financial products or
services. The Director shall coordinate with other Federal
agencies to route complaints to other Federal regulators,
where appropriate.
(B) Routing calls to states.--To the extent practicable,
State agencies may receive appropriate complaints from the
systems established under subparagraph (A), if--
(i) the State agency system has the functional capacity to
receive calls or electronic reports routed by the Bureau
systems; and
(ii) the State agency has satisfied any conditions of
participation in the system that the Bureau may establish,
including treatment of personally identifiable information
and sharing of information on complaint resolution or related
compliance procedures and resources.
(C) Reports to the congress.--The Director shall present an
annual report to Congress not later than March 31 of each
year on the complaints received by the Bureau in the prior
year regarding consumer financial products and services. Such
report shall include information and analysis about complaint
numbers, complaint types, and, where applicable, information
about resolution of complaints.
(D) Data sharing required.--To facilitate preparation of
the reports required under subparagraph (C), supervision and
enforcement activities, and monitoring of the market for
consumer financial products and services, the Bureau shall
share consumer complaint information with prudential
regulators, other Federal agencies, and State agencies,
consistent with Federal law applicable to personally
identifiable information. The prudential regulators and other
Federal agencies shall share data relating to consumer
complaints regarding consumer financial products and services
with the Bureau, consistent with Federal law applicable to
personally identifiable information.
(c) Office of Fair Lending and Equal Opportunity.--
(1) Establishment.--The Director shall establish within the
Bureau the Office of Fair Lending and Equal Opportunity.
(2) Functions.--The Office of Fair Lending and Equal
Opportunity shall have such powers and duties as the Director
may delegate to the Office, including--
(A) providing oversight and enforcement of Federal laws
intended to ensure the fair, equitable, and nondiscriminatory
access to credit for both individuals and communities that
are enforced by the Bureau, including the Equal Credit
Opportunity Act and the Home Mortgage Disclosure Act;
(B) coordinating fair lending and fair housing efforts of
the Bureau with other Federal agencies and State regulators,
as appropriate, to promote consistent, efficient, and
effective enforcement of Federal fair lending laws;
(C) working with private industry, fair lending, civil
rights, consumer and community advocates on the promotion of
fair lending compliance and education; and
(D) providing annual reports to Congress on the efforts of
the Bureau to fulfill its fair lending mandate.
(3) Administration of office.--There is established the
position of Assistant Director of the Bureau for Fair Lending
and Equal Opportunity, who--
(A) shall be appointed by the Director; and
(B) shall carry out such duties as the Director may
delegate to such Assistant Director.
(d) Office of Financial Literacy.--
(1) Establishment.--The Director shall establish an Office
of Financial Literacy, which shall be responsible for
developing and implementing initiatives intended to educate
and empower consumers to make better informed financial
decisions.
(2) Other duties.--The Office of Financial Literacy shall
develop and implement a strategy to improve the financial
literacy of consumers that includes measurable goals and
objectives, in consultation with the Financial Literacy and
Education Commission, consistent with the National Strategy
for Financial Education, through activities including
providing opportunities for consumers to access--
(A) financial counseling;
(B) information to assist with the evaluation of credit
products and the understanding of credit histories and
scores;
(C) savings, borrowing, and other services found at
mainstream financial institutions;
(D) activities intended to--
(i) prepare the consumer for educational expenses and the
submission of financial aid applications, and other major
purchases;
(ii) reduce debt; and
(iii) improve the financial situation of the consumer;
(E) assistance in developing long-term savings strategies;
and
(F) wealth building and financial services during the
preparation process to claim earned income tax credits and
Federal benefits.
(3) Coordination.--The Office of Financial Literacy shall
coordinate with other units within the Bureau in carrying out
its functions, including--
(A) working with the Community Affairs Office to implement
the strategy to improve financial literacy of consumers; and
(B) working with the research unit established by the
Director to conduct research related to consumer financial
education and counseling.
(4) Report.--Not later than 24 months after the designated
transfer date, and annually thereafter, the Director shall
submit a report on its financial literacy activities and
strategy to improve financial literacy of consumers to--
(A) the Committee on Banking, Housing, and Urban Affairs of
the Senate; and
(B) the Committee on Financial Services of the House of
Representatives.
(5) Membership in financial literacy and education
commission.--Section 513(c)(1) of the Financial Literacy and
Education Improvement Act (20 U.S.C. 9702(c)(1)) is amended--
(A) in subparagraph (B), by striking ``and'' at the end;
(B) by redesignating subparagraph (C) as subparagraph (D);
and
(C) by inserting after subparagraph (B) the following new
subparagraph:
``(C) the Director of the Bureau of Consumer Financial
Protection; and''.
(6) Conforming amendment.--Section 513(d) of the Financial
Literacy and Education Improvement Act (20 U.S.C. 9702(d)) is
amended by adding at the end the following: ``The Director of
the Bureau of Consumer Financial Protection shall serve as
the Vice Chairman.''.

SEC. 1014. CONSUMER ADVISORY BOARD.

(a) Establishment Required.--The Director shall establish a
Consumer Advisory Board to advise and consult with the Bureau
in the exercise of its functions under the Federal consumer
financial laws, and to provide information on emerging
practices in the consumer financial products or services
industry, including regional trends, concerns, and other
relevant information.
(b) Membership.--In appointing the members of the Consumer
Advisory Board, the Director shall seek to assemble experts
in consumer protection, financial services, community
development, fair lending, and consumer financial products or
services and seek representation of the interests of covered
persons and consumers, without regard to party affiliation.
Not fewer than 6 members shall be appointed upon the
recommendation of the regional Federal Reserve Bank
Presidents, on a rotating basis.
(c) Meetings.--The Consumer Advisory Board shall meet from
time to time at the call of the Director, but, at a minimum,
shall meet at least twice in each year.
(d) Compensation and Travel Expenses.--Members of the
Consumer Advisory Board who are not full-time employees of
the United States shall--
(1) be entitled to receive compensation at a rate fixed by
the Director while attending meetings of the Consumer
Advisory Board, including travel time; and
(2) be allowed travel expenses, including transportation
and subsistence, while away from their homes or regular
places of business.

SEC. 1015. COORDINATION.

The Bureau shall coordinate with the Commission, the
Commodity Futures Trading Commission, and other Federal
agencies and State regulators, as appropriate, to promote
consistent regulatory treatment of consumer financial and
investment products and services.

SEC. 1016. APPEARANCES BEFORE AND REPORTS TO CONGRESS.

(a) Appearances Before Congress.--The Director of the
Bureau shall appear before the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives at semi-
annual hearings regarding the reports required under
subsection (b).
(b) Reports Required.--The Bureau shall, concurrent with
each semi-annual hearing referred to in subsection (a),
prepare and submit 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, a report, beginning with the session
following the designated transfer date.
(c) Contents.--The reports required by subsection (b) shall
include--
(1) a discussion of the significant problems faced by
consumers in shopping for or obtaining consumer financial
products or services;
(2) a justification of the budget request of the previous
year;
(3) a list of the significant rules and orders adopted by
the Bureau, as well as other significant initiatives
conducted by the Bureau, during the preceding year and the
plan of the Bureau for rules, orders, or other initiatives to
be undertaken during the upcoming period;
(4) an analysis of complaints about consumer financial
products or services that the Bureau has received and
collected in its central database on complaints during the
preceding year;

[[Page S2939]]

(5) a list, with a brief statement of the issues, of the
public supervisory and enforcement actions to which the
Bureau was a party during the preceding year;
(6) the actions taken regarding rules, orders, and
supervisory actions with respect to covered persons which are
not credit unions or depository institutions;
(7) an assessment of significant actions by State attorneys
general or State regulators relating to Federal consumer
financial law; and
(8) an analysis of the efforts of the Bureau to fulfill the
fair lending mission of the Bureau.

SEC. 1017. FUNDING; PENALTIES AND FINES.

(a) Transfer of Funds From Board Of Governors.--
(1) In general.--Each year (or quarter of such year),
beginning on the designated transfer date, and each quarter
thereafter, the Board of Governors shall transfer to the
Bureau from the combined earnings of the Federal Reserve
System, the amount determined by the Director to be
reasonably necessary to carry out the authorities of the
Bureau under Federal consumer financial law, taking into
account such other sums made available to the Bureau from the
preceding year (or quarter of such year).
(2) Funding cap.--
(A) In general.--Notwithstanding paragraph (1), and in
accordance with this paragraph, the amount that shall be
transferred to the Bureau in each fiscal year shall not
exceed a fixed percentage of the total operating expenses of
the Federal Reserve System, as reported in the Annual Report,
2009, of the Board of Governors, equal to--
(i) 10 percent of such expenses in fiscal year 2011;
(ii) 11 percent of such expenses in fiscal year 2012; and
(iii) 12 percent of such expenses in fiscal year 2013, and
in each year thereafter.
(B) Amount adjusted for inflation.--The dollar amount
referred to in subparagraph (A)(iii) shall be adjusted
annually, using the percent by which the average urban
consumer price index for the quarter preceding the date of
the payment differs from the average of that index for the
same quarter in the prior year.
(3) Transition period.--Beginning on the date of enactment
of this Act and until the designated transfer date, the Board
of Governors shall transfer to the Bureau the amount
estimated by the Secretary needed to carry out the
authorities granted to the Bureau under Federal consumer
financial law, from the date of enactment of this Act until
the designated transfer date.
(4) Budget and financial management.--
(A) Financial operating plans and forecasts.--The Director
shall provide to the Director of the Office of Management and
Budget copies of the financial operating plans and forecasts
of the Director, as prepared by the Director in the ordinary
course of the operations of the Bureau, and copies of the
quarterly reports of the financial condition and results of
operations of the Bureau, as prepared by the Director in the
ordinary course of the operations of the Bureau.
(B) Financial statements.--The Bureau shall prepare
annually a statement of--
(i) assets and liabilities and surplus or deficit;
(ii) income and expenses; and
(iii) sources and application of funds.
(C) Financial management systems.--The Bureau shall
implement and maintain financial management systems that
comply substantially with Federal financial management
systems requirements and applicable Federal accounting
standards.
(D) Assertion of internal controls.--The Director shall
provide to the Comptroller General of the United States an
assertion as to the effectiveness of the internal controls
that apply to financial reporting by the Bureau, using the
standards established in section 3512(c) of title 31, United
States Code.
(E) Rule of construction.--This subsection may not be
construed as implying any obligation on the part of the
Director to consult with or obtain the consent or approval of
the Director of the Office of Management and Budget with
respect to any report, plan, forecast, or other information
referred to in subparagraph (A) or any jurisdiction or
oversight over the affairs or operations of the Bureau.
(5) Audit of the bureau.--
(A) In general.--The Comptroller General shall annually
audit the financial transactions of the Bureau in accordance
with the United States generally accepted government auditing
standards, as may be prescribed by the Comptroller General of
the United States. The audit shall be conducted at the place
or places where accounts of the Bureau are normally kept. The
representatives of the Government Accountability Office shall
have access to the personnel and to all books, accounts,
documents, papers, records (including electronic records),
reports, files, and all other papers, automated data, things,
or property belonging to or under the control of or used or
employed by the Bureau pertaining to its financial
transactions and necessary to facilitate the audit, and such
representatives shall be afforded full facilities for
verifying transactions with the balances or securities held
by depositories, fiscal agents, and custodians. All such
books, accounts, documents, records, reports, files, papers,
and property of the Bureau shall remain in possession and
custody of the Bureau. The Comptroller General may obtain and
duplicate any such books, accounts, documents, records,
working papers, automated data and files, or other
information relevant to such audit without cost to the
Comptroller General, and the right of access of the
Comptroller General to such information shall be enforceable
pursuant to section 716(c) of title 31, United States Code.
(B) Report.--The Comptroller General shall submit to the
Congress a report of each annual audit conducted under this
subsection. The report to the Congress shall set forth the
scope of the audit and shall include the statement of assets
and liabilities and surplus or deficit, the statement of
income and expenses, the statement of sources and application
of funds, and such comments and information as may be deemed
necessary to inform Congress of the financial operations and
condition of the Bureau, together with such recommendations
with respect thereto as the Comptroller General may deem
advisable. A copy of each report shall be furnished to the
President and to the Bureau at the time submitted to the
Congress.
(C) Assistance and costs.--For the purpose of conducting an
audit under this subsection, the Comptroller General may, in
the discretion of the Comptroller General, employ by
contract, without regard to section 3709 of the Revised
Statutes of the United States (41 U.S.C. 5), professional
services of firms and organizations of certified public
accountants for temporary periods or for special purposes.
Upon the request of the Comptroller General, the Director of
the Bureau shall transfer to the Government Accountability
Office from funds available, the amount requested by the
Comptroller General to cover the full costs of any audit and
report conducted by the Comptroller General. The Comptroller
General shall credit funds transferred to the account
established for salaries and expenses of the Government
Accountability Office, and such amount shall be available
upon receipt and without fiscal year limitation to cover the
full costs of the audit and report.
(b) Consumer Financial Protection Fund.--
(1) Separate fund in federal reserve board established.--
There is established in the Federal Reserve Board a separate
fund, to be known as the ``Consumer Financial Protection
Fund'' (referred to in this section as the ``Bureau Fund'').
(2) Fund receipts.--All amounts transferred to the Bureau
under subsection (a) shall be deposited into the Bureau Fund.
(3) Investment authority.--
(A) Amounts in bureau fund may be invested.--The Bureau may
request the Board of Governors to invest the portion of the
Bureau Fund that is not, in the judgment of the Bureau,
required to meet the current needs of the Bureau.
(B) Eligible investments.--Investments authorized by this
paragraph shall be made by the Board of Governors 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 Bureau Fund, as
determined by the Bureau.
(C) Interest and proceeds credited.--The interest on, and
the proceeds from the sale or redemption of, any obligations
held in the Bureau Fund shall be credited to the Bureau Fund.
(c) Use of Funds.--
(1) In general.--Funds obtained by, transferred to, or
credited to the Bureau Fund shall be immediately available to
the Bureau and under the control of the Director, and shall
remain available until expended, to pay the expenses of the
Bureau in carrying out its duties and responsibilities. The
compensation of the Director and other employees of the
Bureau and all other expenses thereof may be paid from,
obtained by, transferred to, or credited to the Bureau Fund
under this section.
(2) Funds that are not government funds.--Funds obtained by
or transferred to the Bureau 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 Bureau Fund and in
the Civil Penalty Fund established under subsection (d) shall
not be subject to apportionment for purposes of chapter 15 of
title 31, United States Code, or under any other authority.
(d) Penalties and Fines.--
(1) Establishment of victims relief fund.--There is
established in the Federal Reserve Board a fund to be known
as the ``Consumer Financial Protection Civil Penalty Fund''
(referred to in this subsection as the ``Civil Penalty
Fund''). If the Bureau obtains a civil penalty against any
person in any judicial or administrative action under Federal
consumer financial laws, the Bureau shall deposit into the
Civil Penalty Fund, the amount of the penalty collected.
(2) Payment to victims.--Amounts in the Civil Penalty Fund
shall be available to the Bureau, without fiscal year
limitation, for payments to the victims of activities for
which civil penalties have been imposed under the Federal
consumer financial laws. To the extent such victims cannot be
located or such payments are otherwise not practicable, the
Bureau may use such funds for the purpose of consumer
education and financial literacy programs.

SEC. 1018. EFFECTIVE DATE.

This subtitle shall become effective on the date of
enactment of this Act.

[[Page S2940]]

Subtitle B--General Powers of the Bureau

SEC. 1021. PURPOSE, OBJECTIVES, AND FUNCTIONS.

(a) Purpose.--The Bureau shall seek to implement and, where
applicable, enforce Federal consumer financial law
consistently for the purpose of ensuring that markets for
consumer financial products and services are fair,
transparent, and competitive.
(b) Objectives.--The Bureau is authorized to exercise its
authorities under Federal consumer financial law for the
purposes of ensuring that, with respect to consumer financial
products and services--
(1) consumers are provided with timely and understandable
information to make responsible decisions about financial
transactions;
(2) consumers are protected from unfair, deceptive, or
abusive acts and practices and from discrimination;
(3) outdated, unnecessary, or unduly burdensome regulations
are regularly identified and addressed in order to reduce
unwarranted regulatory burdens;
(4) Federal consumer financial law is enforced
consistently, without regard to the status of a person as a
depository institution, in order to promote fair competition;
and
(5) markets for consumer financial products and services
operate transparently and efficiently to facilitate access
and innovation.
(c) Functions.--The primary functions of the Bureau are--
(1) conducting financial education programs;
(2) collecting, investigating, and responding to consumer
complaints;
(3) collecting, researching, monitoring, and publishing
information relevant to the functioning of markets for
consumer financial products and services to identify risks to
consumers and the proper functioning of such markets;
(4) subject to sections 1024 through 1026, supervising
covered persons for compliance with Federal consumer
financial law, and taking appropriate enforcement action to
address violations of Federal consumer financial law;
(5) issuing rules, orders, and guidance implementing
Federal consumer financial law; and
(6) performing such support activities as may be necessary
or useful to facilitate the other functions of the Bureau.

SEC. 1022. RULEMAKING AUTHORITY.

(a) In General.--The Bureau is authorized to exercise its
authorities under Federal consumer financial law to
administer, enforce, and otherwise implement the provisions
of Federal consumer financial law.
(b) Rulemaking, Orders, and Guidance.--
(1) General authority.--The Director may prescribe rules
and issue orders and guidance, as may be necessary or
appropriate to enable the Bureau to administer and carry out
the purposes and objectives of the Federal consumer financial
laws, and to prevent evasions thereof.
(2) Standards for rulemaking.--In prescribing a rule under
the Federal consumer financial laws--
(A) the Bureau shall consider the potential benefits and
costs to consumers and covered persons, including the
potential reduction of access by consumers to consumer
financial products or services resulting from such rule;
(B) the Bureau shall consult with the appropriate
prudential regulators or other Federal agencies prior to
proposing a rule and during the comment process regarding
consistency with prudential, market, or systemic objectives
administered by such agencies; and
(C) if, during the consultation process described in
subparagraph (B), a prudential regulator provides the Bureau
with a written objection to the proposed rule of the Bureau
or a portion thereof, the Bureau shall include in the
adopting release a description of the objection and the basis
for the Bureau decision, if any, regarding such objection,
except that nothing in this clause shall be construed as
altering or limiting the procedures under section 1023 that
may apply to any rule prescribed by the Bureau.
(3) Exemptions.--
(A) In general.--The Bureau, by rule, may conditionally or
unconditionally exempt any class of covered persons, service
providers, or consumer financial products or services, from
any provision of this title, or from any rule issued under
this title, as the Bureau determines necessary or appropriate
to carry out the purposes and objectives of this title,
taking into consideration the factors in subparagraph (B).
(B) Factors.--In issuing an exemption, as permitted under
subparagraph (A), the Bureau shall, as appropriate, take into
consideration--
(i) the total assets of the class of covered persons;
(ii) the volume of transactions involving consumer
financial products or services in which the class of covered
persons engages; and
(iii) existing provisions of law which are applicable to
the consumer financial product or service and the extent to
which such provisions provide consumers with adequate
protections.
(4) Exclusive rulemaking authority.--Notwithstanding any
other provisions of Federal law, to the extent that a
provision of Federal consumer financial law authorizes the
Bureau and another Federal agency to issue regulations under
that provision of law for purposes of assuring compliance
with Federal consumer financial law and any regulations
thereunder, the Bureau shall have the exclusive authority to
prescribe rules subject to those provisions of law.
(c) Monitoring.--
(1) In general.--In order to support its rulemaking and
other functions, the Bureau shall monitor for risks to
consumers in the offering or provision of consumer financial
products or services, including developments in markets for
such products or services.
(2) Considerations.--In allocating its resources to perform
the monitoring required by this section, the Bureau may
consider, among other factors--
(A) likely risks and costs to consumers associated with
buying or using a type of consumer financial product or
service;
(B) understanding by consumers of the risks of a type of
consumer financial product or service;
(C) the legal protections applicable to the offering or
provision of a consumer financial product or service,
including the extent to which the law is likely to adequately
protect consumers;
(D) rates of growth in the offering or provision of a
consumer financial product or service;
(E) the extent, if any, to which the risks of a consumer
financial product or service may disproportionately affect
traditionally underserved consumers; or
(F) the types, number, and other pertinent characteristics
of covered persons that offer or provide the consumer
financial product or service.
(3) Reports.--The Bureau shall publish not fewer than 1
report of significant findings of its monitoring required by
this subsection in each calendar year, beginning with the
first calendar year that begins at least 1 year after the
designated transfer date.
(4) Collection of information.--In conducting research on
the offering and provision of consumer financial products or
services, the Bureau shall have the authority to gather
information from time to time regarding the organization,
business conduct, markets, and activities of persons
operating in consumer financial services markets. In order to
gather such information, the Bureau may--
(A) gather and compile information from examination reports
concerning covered persons or service providers, assessment
of consumer complaints, surveys, and interviews of covered
persons and consumers, and review of available databases;
(B) require persons to file with the Bureau, under oath or
otherwise, in such form and within such reasonable period of
time as the Bureau may prescribe, by rule or order, annual or
special reports, or answers in writing to specific questions,
furnishing such information as the Bureau may require; and
(C) make public such information obtained by the Bureau
under this section, as is in the public interest in reports
or otherwise in the manner best suited for public information
and use.
(5) Confidentiality rules.--The Bureau shall prescribe
rules regarding the confidential treatment of information
obtained from persons in connection with the exercise of its
authorities under Federal consumer financial law.
(A) Access by the bureau to reports of other regulators.--
(i) Examination and financial condition reports.--Upon
providing reasonable assurances of confidentiality, the
Bureau shall have access to any report of examination or
financial condition made by a prudential regulator or other
Federal agency having jurisdiction over a covered person or
service provider, and to all revisions made to any such
report.
(ii) Provision of other reports to the bureau.--In addition
to the reports described in clause (i), a prudential
regulator or other Federal agency having jurisdiction over a
covered person or service provider may, in its discretion,
furnish to the Bureau any other report or other confidential
supervisory information concerning any insured depository
institution, credit union, or other entity examined by such
agency under authority of any provision of Federal law.
(B) Access by other regulators to reports of the bureau.--
(i) Examination reports.--Upon providing reasonable
assurances of confidentiality, a prudential regulator, a
State regulator, or any other Federal agency having
jurisdiction over a covered person or service provider shall
have access to any report of examination made by the Bureau
with respect to such person, and to all revisions made to any
such report.
(ii) Provision of other reports to other regulators.--In
addition to the reports described in clause (i), the Bureau
may, in its discretion, furnish to a prudential regulator or
other agency having jurisdiction over a covered person or
service provider any other report or other confidential
supervisory information concerning such person examined by
the Bureau under the authority of any other provision of
Federal law.
(6) Privacy considerations.--In collecting information from
any person, publicly releasing information held by the
Bureau, or requiring covered persons to publicly report
information, the Bureau shall take steps to ensure that
proprietary, personal, or confidential consumer information
that is protected from public disclosure under section 552(b)
or 552a of title 5, United States Code, or any other
provision of law, is not made public under this title.

[[Page S2941]]

(d) Assessment of Significant Rules.--
(1) In general.--The Bureau shall conduct an assessment of
each significant rule or order adopted by the Bureau under
Federal consumer financial law. The assessment shall address,
among other relevant factors, the effectiveness of the rule
or order in meeting the purposes and objectives of this title
and the specific goals stated by the Bureau. The assessment
shall reflect available evidence and any data that the Bureau
reasonably may collect.
(2) Reports.--The Bureau shall publish a report of its
assessment under this subsection not later than 5 years after
the effective date of the subject rule or order.
(3) Public comment required.--Before publishing a report of
its assessment, the Bureau shall invite public comment on
recommendations for modifying, expanding, or eliminating the
newly adopted significant rule or order.
(e) Information Gathering.--In conducting any monitoring or
assessment required by this section, the Bureau may gather
information through a variety of methods, including by
conducting surveys or interviews of consumers.

SEC. 1023. REVIEW OF BUREAU REGULATIONS.

(a) Review of Bureau Regulations.--On the petition of a
member agency of the Council, the Council may set aside a
final regulation prescribed by the Bureau, or any provision
thereof, if the Council decides, in accordance with
subsection (c), that the regulation or provision would put
the safety and soundness of the United States banking system
or the stability of the financial system of the United States
at risk.
(b) Petition.--
(1) Procedure.--An agency represented by a member of the
Council may petition the Council, in writing, and in
accordance with rules prescribed pursuant to subsection (f),
to stay the effectiveness of, or set aside, a regulation if
the member agency filing the petition--
(A) has in good faith attempted to work with the Bureau to
resolve concerns regarding the effect of the rule on the
safety and soundness of the United States banking system or
the stability of the financial system of the United States;
and
(B) files the petition with the Council not later than 10
days after the date on which the regulation has be
(C) en published in the Federal Register.
(2) Publication.--Any petition filed with the Council under
this section shall be published in the Federal Register and
transmitted contemporaneously with filing to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives.
(c) Stays and Set Asides.--
(1) Stay.--
(A) In general.--Upon the request of any member agency, the
Chairperson of the Council may stay the effectiveness of a
regulation for the purpose of allowing appropriate
consideration of the petition by the Council.
(B) Expiration.--A stay issued under this paragraph shall
expire on the earlier of--
(i) 90 days after the date of filing of the petition under
subsection (b); or
(ii) the date on which the Council makes a decision under
paragraph (3).
(2) No adverse inference.--After the expiration of any stay
imposed under this section, no inference shall be drawn
regarding the validity or enforceability of a regulation
which was the subject of the petition.
(3) Vote.--
(A) In general.--The decision to issue a stay of, or set
aside, any regulation under this section shall be made only
with the affirmative vote in accordance with subparagraph (B)
of \2/3\ of the members of the Council then serving.
(B) Authorization to vote.--A member of the Council may
vote to stay the effectiveness of, or set aside, a final
regulation prescribed by the Bureau only if the agency or
department represented by that member has--
(i) considered any relevant information provided by the
agency submitting the petition and by the Bureau; and
(ii) made an official determination, at a public meeting
where applicable, that the regulation which is the subject of
the petition would put the safety and soundness of the United
States banking system or the stability of the financial
system of the United States at risk.
(4) Decisions to set aside.--
(A) Effect of decision.--A decision by the Council to set
aside a regulation prescribed by the Bureau, or provision
thereof, shall render such regulation, or provision thereof,
unenforceable.
(B) Timely action required.--The Council may not issue a
decision to set aside a regulation, or provision thereof,
which is the subject of a petition under this section after
the expiration of the later of--
(i) 45 days following the date of filing of the petition,
unless a stay is issued under paragraph (1); or
(ii) the expiration of a stay issued by the Council under
this section.
(C) Separate authority.--The issuance of a stay under this
section does not affect the authority of the Council to set
aside a regulation.
(5) Dismissal due to inaction.--A petition under this
section shall be deemed dismissed if the Council has not
issued a decision to set aside a regulation, or provision
thereof, within the period for timely action under paragraph
(4)(B).
(6) Publication of decision.--Any decision under this
subsection to issue a stay of, or set aside, a regulation or
provision thereof shall be published by the Council in the
Federal Register as soon as practicable after the decision is
made, with an explanation of the reasons for the decision.
(7) Rulemaking procedures inapplicable.--The notice and
comment procedures under section 553 of title 5, United
States Code, shall not apply to any decision under this
section of the Council to issue a stay of, or set aside, a
regulation.
(8) Judicial review of decisions by the council.--A
decision by the Council to set aside a regulation prescribed
by the Bureau, or provision thereof, shall be subject to
review under chapter 7 of title 5, United States Code.
(d) Application of Other Law.--Nothing in this section
shall be construed as altering, limiting, or restricting the
application of any other provision of law, except as
otherwise specifically provided in this section, including
chapter 5 and chapter 7 of title 5, United States Code, to a
regulation which is the subject of a petition filed under
this section.
(e) Savings Clause.--Nothing in this section shall be
construed as limiting or restricting the Bureau from engaging
in a rulemaking in accordance with applicable law.
(f) Implementing Rules.--The Council shall prescribe
procedural rules to implement this section.

SEC. 1024. SUPERVISION OF NONDEPOSITORY COVERED PERSONS.

(a) Scope of Coverage.--
(1) Applicability.--Notwithstanding any other provision of
this title, and except as provided in paragraph (3), this
section shall apply to any covered person who--
(A) offers or provides origination, brokerage, or servicing
of loans secured by real estate for use by consumers
primarily for personal, family, or household purposes, or
loan modification or foreclosure relief services in
connection with such loans; or
(B) is a larger participant of a market for other consumer
financial products or services, as defined by rule in
accordance with paragraph (2).
(2) Rulemaking to define covered persons subject to this
section.--The Bureau shall consult with the Federal Trade
Commission prior to issuing a rule to define covered persons
subject to this section, in accordance with paragraph (1)(B).
The Bureau shall issue its initial rule within 1 year of the
designated transfer date.
(3) Rules of construction.--
(A) Certain persons excluded.--This section shall not apply
to persons described in section 1025(a) or 1026(a).
(B) Activity levels.--For purposes of computing activity
levels under paragraph (1) or rules issued thereunder,
activities of affiliated companies (other than insured
depository institutions or insured credit unions) shall be
aggregated.
(b) Supervision.--
(1) In general.--The Bureau shall require reports and
conduct examinations on a periodic basis of persons described
in subsection (a) for purposes of--
(A) assessing compliance with the requirements of Federal
consumer financial law;
(B) obtaining information about the activities and
compliance systems or procedures of such person; and
(C) detecting and assessing risks to consumers and to
markets for consumer financial products and services.
(2) Risk-based supervision program.--The Bureau shall
exercise its authority under paragraph (1) in a manner
designed to ensure that such exercise, with respect to
persons described in subsection (a), is based on the
assessment by the Bureau of the risks posed to consumers in
the relevant product markets and geographic markets, and
taking into consideration, as applicable--
(A) the asset size of the covered person;
(B) the volume of transactions involving consumer financial
products or services in which the covered person engages;
(C) the risks to consumers created by the provision of such
consumer financial products or services;
(D) the extent to which such institutions are subject to
oversight by State authorities for consumer protection; and
(E) any other factors that the Bureau determines to be
relevant to a class of covered persons.
(3) Coordination.--To minimize regulatory burden, the
Bureau shall coordinate its supervisory activities with the
supervisory activities conducted by prudential regulators and
the State bank regulatory authorities, including establishing
their respective schedules for examining persons described in
subsection (a) and requirements regarding reports to be
submitted by such persons.
(4) Use of existing reports.--The Bureau shall, to the
fullest extent possible, use--
(A) reports pertaining to persons described in subsection
(a) that have been provided or required to have been provided
to a Federal or State agency; and
(B) information that has been reported publicly.
(5) Preservation of authority.--Nothing in this title may
be construed as limiting the authority of the Director to
require reports from persons described in subsection (a), as
permitted under paragraph (1), regarding information owned or
under the control of

[[Page S2942]]

such person, regardless of whether such information is
maintained, stored, or processed by another person.
(6) Reports of tax law noncompliance.--The Bureau shall
provide the Commissioner of Internal Revenue with any report
of examination or related information identifying possible
tax law noncompliance.
(7) Registration, recordkeeping, and other requirements for
certain persons.--
(A) In general.--The Bureau shall prescribe rules to
facilitate supervision of persons described in subsection (a)
and assessment and detection of risks to consumers.
(B) Registration.--
(i) In general.--The Bureau shall prescribe rules regarding
registration requirements for persons described in subsection
(a).
(ii) Exception for related persons.--The Bureau may not
impose requirements under this section regarding the
registration of a related person.
(iii) Registration information.--Subject to rules
prescribed by the Bureau, the Bureau shall publicly disclose
the registration information about persons described in
subsection (a) to facilitate the ability of consumers to
identify persons described in subsection (a) registered with
the Bureau.
(C) Recordkeeping.--The Bureau may require a person
described in subsection (a), to generate, provide, or retain
records for the purposes of facilitating supervision of such
persons and assessing and detecting risks to consumers.
(D) Requirements concerning obligations.--The Bureau may
prescribe rules regarding a person described in subsection
(a), to ensure that such persons are legitimate entities and
are able to perform their obligations to consumers. Such
requirements may include background checks for principals,
officers, directors, or key personnel and bonding or other
appropriate financial requirements.
(E) Consultation with state agencies.--In developing and
implementing requirements under this paragraph, the Bureau
shall consult with State agencies regarding requirements or
systems (including coordinated or combined systems for
registration), where appropriate.
(c) Exclusive Enforcement Authority.--
(1) The bureau to have exclusive enforcement authority.--To
the extent that Federal law authorizes the Bureau and another
Federal agency to enforce Federal consumer financial law, the
Bureau shall have exclusive authority to enforce that Federal
consumer financial law with respect to any person described
in subsection (a)(1)(B).
(2) Referral.--Any Federal agency authorized to enforce a
Federal consumer financial law described in paragraph (1) may
recommend in writing to the Bureau that the Bureau initiate
an enforcement proceeding, as the Bureau is authorized by
that Federal law or by this title.
(3) Coordination with the federal trade commission.--
(A) In general.--The Bureau and the Federal Trade
Commission shall coordinate enforcement actions for
violations of Federal law regarding the offering or provision
of consumer financial products or services by any covered
person that is described in subsection (a)(1)(A), or service
providers thereto. In carrying out this subparagraph, the
agencies shall negotiate an agreement to establish procedures
for such coordination, including procedures for notice to the
other agency, where feasible, prior to initiating a civil
action to enforce a Federal law regarding the offering or
provision of consumer financial products or services.
(B) Civil actions.--Whenever a civil action has been filed
by, or on behalf of, the Bureau or the Federal Trade
Commission for any violation of any provision of Federal law
described in subparagraph (A), or any regulation prescribed
under such provision of law--
(i) the other agency may not, during the pendency of that
action, institute a civil action under such provision of law
against any defendant named in the complaint in such pending
action for any violation alleged in the complaint; and
(ii) the Bureau or the Federal Trade Commission may
intervene as a party in any such action brought by the other
agency, and, upon intervening--

(I) be heard on all matters arising in such enforcement
action; and
(II) file petitions for appeal in such actions.

(C) Agreement terms.--The terms of any agreement negotiated
under subparagraph (A) may modify or supersede the provisions
of subparagraph (B).
(D) Deadline.--The agencies shall reach the agreement
required under subparagraph (A) not later than 6 months after
the designated transfer date.
(d) Exclusive Rulemaking and Examination Authority.--
Notwithstanding any other provision of Federal law, to the
extent that Federal law authorizes the Bureau and another
Federal agency to issue regulations or guidance, conduct
examinations, or require reports from a person described in
subsection (a) under such law for purposes of assuring
compliance with Federal consumer financial law and any
regulations thereunder, the Bureau shall have the exclusive
authority to prescribe rules, issue guidance, conduct
examinations, require reports, or issue exemptions with
regard to a person described in subsection (a), subject to
those provisions of law.
(e) Service Providers.--A service provider to a person
described in subsection (a) shall be subject to the authority
of the Bureau under this section, to the same extent as if
such service provider were engaged in a service relationship
with a bank, and the Bureau were an appropriate Federal
banking agency under section 7(c) of the Bank Service Company
Act (12 U.S.C. 1867(c)). In conducting any examination or
requiring any report from a service provider subject to this
subsection, the Bureau shall coordinate with the appropriate
prudential regulator, as applicable.
(f) Preservation of Farm Credit Administration Authority.--
No provision of this title may be construed as modifying,
limiting, or otherwise affecting the authority of the Farm
Credit Administration.

SEC. 1025. SUPERVISION OF VERY LARGE BANKS, SAVINGS
ASSOCIATIONS, AND CREDIT UNIONS.

(a) Scope of Coverage.--
(1) Applicability.--This section shall apply to any covered
person that is--
(A) an insured depository institution with total assets of
more than $10,000,000,000 and any affiliate thereof; or
(B) an insured credit union with total assets of more than
$10,000,000,000 and any affiliate thereof.
(2) Rule of construction.--For purposes of determining
total assets under this section and section 1026, the Bureau
shall rely on the same regulations and interim methodologies
specified in section 312(e).
(b) Supervision.--
(1) In general.--The Bureau shall require reports and
conduct examinations on a periodic basis of persons described
in subsection (a) for purposes of--
(A) assessing compliance with the requirements of Federal
consumer financial laws;
(B) obtaining information about the activities and
compliance systems or procedures of such persons; and
(C) detecting and assessing risks to consumers and to
markets for consumer financial products and services.
(2) Coordination.--To minimize regulatory burden, the
Bureau shall coordinate its supervisory activities with the
supervisory activities conducted by prudential regulators and
the State bank regulatory authorities, including establishing
their respective schedules for examining such persons
described in subsection (a) and requirements regarding
reports to be submitted by such persons.
(3) Use of existing reports.--The Bureau shall, to the
fullest extent possible, use--
(A) reports pertaining to a person described in subsection
(a) that have been provided or required to have been provided
to a Federal or State agency; and
(B) information that has been reported publicly.
(4) Preservation of authority.--Nothing in this title may
be construed as limiting the authority of the Director to
require reports from a person described in subsection (a), as
permitted under paragraph (1), regarding information owned or
under the control of such person, regardless of whether such
information is maintained, stored, or processed by another
person.
(5) Reports of tax law noncompliance.--The Bureau shall
provide the Commissioner of Internal Revenue with any report
of examination or related information identifying possible
tax law noncompliance.
(c) Primary Enforcement Authority.--
(1) The bureau to have primary enforcement authority.--To
the extent that the Bureau and another Federal agency are
authorized to enforce a Federal consumer financial law, the
Bureau shall have primary authority to enforce that Federal
consumer financial law with respect to any person described
in subsection (a).
(2) Referral.--Any Federal agency, other than the Federal
Trade Commission, that is authorized to enforce a Federal
consumer financial law may recommend, in writing, to the
Bureau that the Bureau initiate an enforcement proceeding
with respect to a person described in subsection (a), as the
Bureau is authorized to do by that Federal consumer financial
law.
(3) Backup enforcement authority of other federal agency.--
If the Bureau does not, before the end of the 120-day period
beginning on the date on which the Bureau receives a
recommendation under paragraph (2), initiate an enforcement
proceeding, the other agency referred to in paragraph (2) may
initiate an enforcement proceeding, as permitted by the
subject provision of Federal law.
(d) Service Providers.--A service provider to a person
described in subsection (a) shall be subject to the authority
of the Bureau under this section, to the same extent as if
the Bureau were an appropriate Federal banking agency under
section 7(c) of the Bank Service Company Act 12 U.S.C.
1867(c). In conducting any examination or requiring any
report from a service provider subject to this subsection,
the Bureau shall coordinate with the appropriate prudential
regulator.
(e) Simultaneous and Coordinated Supervisory Action.--
(1) Examinations.--A prudential regulator and the Bureau
shall, with respect to each insured depository institution,
insured credit union, or other covered person described in
subsection (a) that is supervised by the prudential regulator
and the Bureau, respectively--
(A) coordinate the scheduling of examinations of the
insured depository institution, insured credit union, or
other covered person described in subsection (a);

[[Page S2943]]

(B) conduct simultaneous examinations of each insured
depository institution, insured credit union, or other
covered person described in subsection (a), unless such
institution requests examinations to be conducted separately;
(C) share each draft report of examination with the other
agency and permit the receiving agency a reasonable
opportunity (which shall not be less than a period of 30 days
after the date of receipt) to comment on the draft report
before such report is made final; and
(D) prior to issuing a final report of examination or
taking supervisory action, take into consideration concerns,
if any, raised in the comments made by the other agency.
(2) Coordination with state bank supervisors.--The Bureau
shall pursue arrangements and agreements with State bank
supervisors to coordinate examinations, consistent with
paragraph (1).
(3) Avoidance of conflict in supervision.--
(A) Request.--If the proposed supervisory determinations of
the Bureau and a prudential regulator (in this section
referred to collectively as the ``agencies'') are
conflicting, an insured depository institution, insured
credit union, or other covered person described in subsection
(a) may request the agencies to coordinate and present a
joint statement of coordinated supervisory action.
(B) Joint statement.--The agencies shall provide a joint
statement under subparagraph (A), not later than 30 days
after the date of receipt of the request of the insured
depository institution, credit union, or covered person
described in subsection (a).
(4) Appeals to governing panel.--
(A) In general.--If the agencies do not resolve the
conflict or issue a joint statement required by subparagraph
(B), or if either of the agencies takes or attempts to take
any supervisory action relating to the request for the joint
statement without the consent of the other agency, an insured
depository institution, insured credit union, or other
covered person described in subsection (a) may institute an
appeal to a governing panel, as provided in this subsection,
not later than 30 days after the expiration of the period
during which a joint statement is required to be filed under
paragraph (3)(B).
(B) Composition of governing panel.--The governing panel
for an appeal under this paragraph shall be composed of--
(i) a representative from the Bureau and a representative
of the prudential regulator, both of whom--

(I) have not participated in the material supervisory
determinations under appeal; and
(II) do not directly or indirectly report to the person who
participated materially in the supervisory determinations
under appeal; and

(ii) one individual representative, to be determined on a
rotating basis, from among the Board of Governors, the
Corporation, the National Credit Union Administration, and
the Office of the Comptroller of the Currency, other than any
agency involved in the subject dispute.
(C) Conduct of appeal.--In an appeal under this paragraph--
(i) the insured depository institution, insured credit
union, or other covered person described in subsection (a)--

(I) shall include in its appeal all the facts and legal
arguments pertaining to the matter; and
(II) may, through counsel, employees, or representatives,
appear before the governing panel in person or by telephone;
and

(ii) the governing panel--

(I) may request the insured depository institution, insured
credit union, or other covered person described in subsection
(a), the Bureau, or the prudential regulator to produce
additional information relevant to the appeal; and
(II) by a majority vote of its members, shall provide a
final determination, in writing, not later than 30 days after
the date of filing of an informationally complete appeal, or
such longer period as the panel and the insured depository
institution, insured credit union, or other covered person
described in subsection (a) may jointly agree.

(D) Public availability of determinations.--A governing
panel shall publish all information contained in a
determination by the governing panel, with appropriate
redactions of information that would be subject to an
exemption from disclosure under section 552 of title 5,
United States Code.
(E) Prohibition against retaliation.--The Bureau and the
prudential regulators shall prescribe rules to provide
safeguards from retaliation against the insured depository
institution, insured credit union, or other covered person
described in subsection (a) instituting an appeal under this
paragraph, as well as their officers and employees.
(F) Limitation.--The process provided in this paragraph
shall not apply to a determination by a prudential regulator
to appoint a conservator or receiver for an insured
depository institution or a liquidating agent for an insured
credit union, as the case may be, or a decision to take
action pursuant to section 38 of the Federal Deposit
Insurance Act (12 U.S.C. 1831o) or section 212 of the Federal
Credit Union Act (112 U.S.C. 1790a), as applicable.
(G) Effect on other authority.--Nothing in this section
shall modify or limit the authority of the Bureau to
interpret, or take enforcement action under, any Federal
consumer financial law.

SEC. 1026. OTHER BANKS, SAVINGS ASSOCIATIONS, AND CREDIT
UNIONS.

(a) Scope of Coverage.--This section shall apply to any
covered person that is--
(1) an insured depository institution with total assets of
$10,000,000,000 or less; or
(2) an insured credit union with total assets of
$10,000,000,000 or less.
(b) Reports.--The Director may require reports from a
person described in subsection (a), as necessary to support
the role of the Bureau in implementing Federal consumer
financial law, to support its examination activities under
subsection (c), and to assess and detect risks to consumers
and consumer financial markets.
(1) Use of existing reports.--The Bureau shall, to the
fullest extent possible, use--
(A) reports pertaining to a person described in subsection
(a) that have been provided or required to have been provided
to a Federal or State agency; and
(B) information that has been reported publicly.
(2) Preservation of authority.--Nothing in this subsection
may be construed as limiting the authority of the Director
from requiring from a person described in subsection (a), as
permitted under paragraph (1), information owned or under the
control of such person, regardless of whether such
information is maintained, stored, or processed by another
person.
(3) Reports of tax law noncompliance.--The Bureau shall
provide the Commissioner of Internal Revenue with any report
of examination or related information identifying possible
tax law noncompliance.
(c) Examinations.--
(1) In general.--The Bureau may, at its discretion, include
examiners on a sampling basis of the examinations performed
by the prudential regulator of persons described in
subsection (a).
(2) Agency coordination.--The prudential regulator shall--
(A) provide all reports, records, and documentation related
to the examination process for any institution included in
the sample referred to in paragraph (1) to the Bureau on a
timely and continual basis;
(B) involve such Bureau examiner in the entire examination
process for such person; and
(C) consider input of the Bureau concerning the scope of an
examination, conduct of the examination, the contents of the
examination report, the designation of matters requiring
attention, and examination ratings.
(d) Enforcement.--
(1) In general.--Except for requiring reports under
subsection (b), the prudential regulator shall have exclusive
authority to enforce compliance with respect to a person
described in subsection (a).
(2) Coordination with prudential regulator.--
(A) Referral.--When the Bureau has reason to believe that a
person described in subsection (a) has engaged in a material
violation of a Federal consumer financial law, the Bureau
shall notify the prudential regulator in writing and
recommend appropriate action to respond.
(B) Response.--Upon receiving a recommendation under
subparagraph (A), the prudential regulator shall provide a
written response to the Bureau not later than 60 days
thereafter.
(e) Service Providers.--A service provider to a substantial
number of persons described in subsection (a) shall be
subject to the authority of the Bureau under section 1025 to
the same extent as if the Bureau were an appropriate Federal
bank agency under section 7(c) of the Bank Service Company
Act (12 U.S.C. 1867(c)). When conducting any examination or
requiring any report from a service provider subject to this
subsection, the Bureau shall coordinate with the appropriate
prudential regulator.

SEC. 1027. LIMITATIONS ON AUTHORITIES OF THE BUREAU;
PRESERVATION OF AUTHORITIES.

(a) Exclusion for Merchants, Retailers, and Other Sellers
of Nonfinancial Goods or Services.--
(1) Sale or brokerage of nonfinancial good or service.--The
Bureau may not exercise any rulemaking, supervisory,
enforcement or other authority under this title with respect
to a person who is a merchant, retailer, or seller of any
nonfinancial good or service and is engaged in the sale or
brokerage of such nonfinancial good or service, except to the
extent that such person is engaged in offering or providing
any consumer financial product or service, or is otherwise
subject to any enumerated consumer law or any law for which
authorities are transferred under subtitle F or H.
(2) Offering or provision of certain consumer financial
products or services in connection with the sale or brokerage
of nonfinancial good or service.--
(A) In general.--Except as provided in subparagraph (B),
and subject to subparagraph (C), the Bureau may not exercise
any rulemaking, supervisory, enforcement, or other authority
under this title with respect to a merchant, retailer, or
seller of nonfinancial goods or services who--
(i) extends credit directly to a consumer, in a case in
which the good or service being provided is not itself a
consumer financial product or service (other than credit
described in this subparagraph), exclusively for the purpose
of enabling that consumer to purchase such nonfinancial good
or service directly from the merchant, retailer, or seller;

[[Page S2944]]

(ii) directly, or through an agreement with another person,
collects debt arising from credit extended as described in
clause (i); or
(iii) sells or conveys debt described in clause (i) that is
delinquent or otherwise in default.
(B) Applicability.--Subparagraph (A) does not apply to any
credit transaction or collection of debt, other than as
described in subparagraph (C), arising from a transaction
described in subparagraph (A)--
(i) in which the merchant, retailer, or seller of
nonfinancial goods or services assigns, sells or otherwise
conveys to another person such debt owed by the consumer
(except for a sale of debt that is delinquent or otherwise in
default, as described in subparagraph (A)(iii));
(ii) in which the credit extended exceeds the market value
of the nonfinancial good or service provided, or the Bureau
otherwise finds that the sale of the nonfinancial good or
service is done as a subterfuge, so as to evade or circumvent
the provisions of this title; or
(iii) in which the merchant, retailer, or seller of
nonfinancial goods or services regularly extends credit and
the credit is--

(I) subject to a finance charge; or
(II) payable by written agreement in more than 4
installments.

(C) Limitation.--Notwithstanding subparagraph (B), the
Bureau may not exercise any rulemaking, supervisory,
enforcement, or other authority under this title with respect
to a merchant, retailer, or seller of nonfinancial goods or
services that is not engaged significantly in offering or
providing consumer financial products or services.
(D) Rule of construction.--No provision of this title may
be construed as modifying, limiting, or superseding the
supervisory or enforcement authority of the Federal Trade
Commission or any other agency (other than the Bureau) with
respect to credit extended, or the collection of debt arising
from such extension, directly by a merchant or retailer to a
consumer exclusively for the purpose of enabling that
consumer to purchase nonfinancial goods or services directly
from the merchant or retailer.
(b) Exclusion for Real Estate Brokerage Activities.--
(1) Real estate brokerage activities excluded.--Without
limiting subsection (a), and except as permitted in paragraph
(2), the Bureau may not exercise any rulemaking, supervisory,
enforcement, or other authority under this title with respect
to a person that is licensed or registered as a real estate
broker or real estate agent, in accordance with State law, to
the extent that such person--
(A) acts as a real estate agent or broker for a buyer,
seller, lessor, or lessee of real property;
(B) brings together parties interested in the sale,
purchase, lease, rental, or exchange of real property;
(C) negotiates, on behalf of any party, any portion of a
contract relating to the sale, purchase, lease, rental, or
exchange of real property (other than in connection with the
provision of financing with respect to any such transaction);
or
(D) offers to engage in any activity, or act in any
capacity, described in subparagraph (A), (B), or (C).
(2) Description of activities.--Paragraph (1) shall not
apply to any person to the extent that such person is engaged
in the offering or provision of any consumer financial
product or service or is otherwise subject to any enumerated
consumer law or any law for which authorities are transferred
under subtitle F or H.
(c) Exclusion for Manufactured Home Retailers and Modular
Home Retailers.--
(1) In general.--The Director may not exercise any
rulemaking, supervisory, enforcement, or other authority over
a person to the extent that--
(A) such person is not described in paragraph (2); and
(B) such person--
(i) acts as an agent or broker for a buyer or seller of a
manufactured home or a modular home;
(ii) facilitates the purchase by a consumer of a
manufactured home or modular home, by negotiating the
purchase price or terms of the sales contract (other than
providing financing with respect to such transaction); or
(iii) offers to engage in any activity described in clause
(i) or (ii).
(2) Description of activities.--A person is described in
this paragraph to the extent that such person is engaged in
the offering or provision of any consumer financial product
or service or is otherwise subject to any enumerated consumer
law or any law for which authorities are transferred under
subtitle F or H.
(3) Definitions.--For purposes of this subsection, the
following definitions shall apply:
(A) Manufactured home.--The term ``manufactured home'' has
the same meaning as in section 603 of the National
Manufactured Housing Construction and Safety Standards Act of
1974 (42 U.S.C. 5402).
(B) Modular home.--The term ``modular home'' means a house
built in a factory in 2 or more modules that meet the State
or local building codes where the house will be located, and
where such modules are transported to the building site,
installed on foundations, and completed.
(d) Exclusion for Accountants and Tax Preparers.--
(1) In general.--Except as permitted in paragraph (2), the
Bureau may not exercise any rulemaking, supervisory,
enforcement, or other authority over--
(A) any person that is a certified public accountant,
permitted to practice as a certified public accounting firm,
or certified or licensed for such purpose by a State, or any
individual who is employed by or holds an ownership interest
with respect to a person described in this subparagraph, when
such person is performing or offering to perform--
(i) customary and usual accounting activities, including
the provision of accounting, tax, advisory, or other services
that are subject to the regulatory authority of a State board
of accountancy or a Federal authority; or
(ii) other services that are incidental to such customary
and usual accounting activities, to the extent that such
incidental services are not offered or provided--

(I) by the person separate and apart from such customary
and usual accounting activities; or
(II) to consumers who are not receiving such customary and
usual accounting activities; or

(B) any person, other than a person described in
subparagraph (A) that performs income tax preparation
activities for consumers.
(2) Description of activities.--
(A) In general.--Paragraph (1) shall not apply to any
person described in paragraph (1)(A) or (1)(B) to the extent
that such person is engaged in any activity which is not a
customary and usual accounting activity described in
paragraph (1)(A) or incidental thereto but which is the
offering or provision of any consumer financial product or
service, except to the extent that a person described in
paragraph (1)(A) is engaged in an activity which is a
customary and usual accounting activity described in
paragraph (1)(A), or incidental thereto.
(B) Not a customary and usual accounting activity.--For
purposes of this subsection, extending or brokering credit is
not a customary and usual accounting activity, or incidental
thereto.
(C) Rule of construction.--For purposes of subparagraphs
(A) and (B), a person described in paragraph (1)(A) shall not
be deemed to be extending credit, if such person is only
extending credit directly to a consumer, exclusively for the
purpose of enabling such consumer to purchase services
described in clause (i) or (ii) of paragraph (1)(A) directly
from such person, and such credit is--
(i) not subject to a finance charge; and
(ii) not payable by written agreement in more than 4
installments.
(D) Other limitations.--Paragraph (1) does not apply to any
person described in paragraph (1)(A) or (1)(B) that is
otherwise subject to any enumerated consumer law or any law
for which authorities are transferred under subtitle F or H.
(e) Exclusion for Attorneys.--
(1) In general.--The Bureau may not exercise any authority
to conduct examinations of an attorney licensed by a State,
to the extent that the attorney is engaged in the practice of
law under the laws of such State.
(2) Exception for enumerated consumer laws and transferred
authorities.--Paragraph (1) shall not apply to an attorney
who is engaged in the offering or provision of any consumer
financial product or service, or is otherwise subject to any
enumerated consumer law or any law for which authorities are
transferred under subtitle F or H.
(f) Exclusion for Persons Regulated by a State Insurance
Regulator.--
(1) In general.--No provision of this title shall be
construed as altering, amending, or affecting the authority
of any State insurance regulator to adopt rules, initiate
enforcement proceedings, or take any other action with
respect to a person regulated by a State insurance regulator.
Except as provided in paragraph (2), the Bureau shall have no
authority to exercise any power to enforce this title with
respect to a person regulated by a State insurance regulator.
(2) Description of activities.--Paragraph (1) does not
apply to any person described in such paragraph to the extent
that such person is engaged in the offering or provision of
any consumer financial product or service or is otherwise
subject to any enumerated consumer law or any law for which
authorities are transferred under subtitle F or H.
(g) Exclusion for Employee Benefit and Compensation Plans
and Certain Other Arrangements Under the Internal Revenue
Code of 1986.--
(1) Preservation of authority of other agencies.--No
provision of this title shall be construed as altering,
amending, or affecting the authority of the Secretary of the
Treasury, the Secretary of Labor, or the Commissioner of
Internal Revenue to adopt regulations, initiate enforcement
proceedings, or take any actions with respect to any
specified plan or arrangement.
(2) Activities not constituting the offering or provision
of any consumer financial product or service.--For purposes
of this title, a person shall not be treated as having
engaged in the offering or provision of any consumer
financial product or service solely because such person is a
specified plan or arrangement, or is engaged in the activity
of establishing or maintaining, for the benefit of employees
of such person (or for members of an employee organization),
any specified plan or arrangement.
(3) Limitation on bureau authority.--
(A) In general.--Except as provided under subparagraphs (B)
and (C), the Bureau may not exercise any rulemaking or
enforcement

[[Page S2945]]

authority with respect to products or services that relate to
any specified plan or arrangement.
(B) Bureau action only pursuant to agency request.--The
Secretary and the Secretary of Labor may jointly issue a
written request to the Bureau regarding implementation of
appropriate consumer protection standards under this title
with respect to the provision of services relating to any
specified plan or arrangement. Subject to a request made
under this subparagraph, the Bureau may exercise rulemaking
authority, and may act to enforce a rule prescribed pursuant
to such request, in accordance with the provisions of this
title. A request made by the Secretary and the Secretary of
Labor under this subparagraph shall describe the basis for,
and scope of, appropriate consumer protection standards to be
implemented under this title with respect to the provision of
services relating to any specified plan or arrangement.
(C) Description of products or services.--To the extent
that a person engaged in providing products or services
relating to any specified plan or arrangement is subject to
any enumerated consumer law or any law for which authorities
are transferred under subtitle F or H, subparagraph (A) shall
not apply with respect to that law.
(4) Specified plan or arrangement.--For purposes of this
subsection, the term ``specified plan or arrangement'' means
any plan, account, or arrangement described in section 220,
223, 401(a), 403(a), 403(b), 408, 408A, 529, or 530 of the
Internal Revenue Code of 1986, or any employee benefit or
compensation plan or arrangement, including a plan that is
subject to title I of the Employee Retirement Income Security
Act of 1974.
(h) Persons Regulated by a State Securities Commission.--
(1) In general.--No provision of this title shall be
construed as altering, amending, or affecting the authority
of any securities commission (or any agency or office
performing like functions) of any State to adopt rules,
initiate enforcement proceedings, or take any other action
with respect to a person regulated by any securities
commission (or any agency or office performing like
functions) of any State. Except as permitted in paragraph (2)
and subsection (f), the Bureau shall have no authority to
exercise any power to enforce this title with respect to a
person regulated by any securities commission (or any agency
or office performing like functions) of any State, but only
to the extent that the person acts in such regulated
capacity.
(2) Description of activities.--Paragraph (1) shall not
apply to any person to the extent such person is engaged in
the offering or provision of any consumer financial product
or service, or is otherwise subject to any enumerated
consumer law or any law for which authorities are transferred
under subtitle F or H.
(i) Exclusion for Persons Regulated by the Commission.--
(1) In general.--No provision of this title may be
construed as altering, amending, or affecting the authority
of the Commission to adopt rules, initiate enforcement
proceedings, or take any other action with respect to a
person regulated by the Commission. The Bureau shall have no
authority to exercise any power to enforce this title with
respect to a person regulated by the Commission.
(2) Consultation and coordination.--Notwithstanding
paragraph (1), the Commission shall consult and coordinate,
where feasible, with the Bureau with respect to any rule
(including any advance notice of proposed rulemaking)
regarding an investment product or service that is the same
type of product as, or that competes directly with, a
consumer financial product or service that is subject to the
jurisdiction of the Bureau under this title or under any
other law. In carrying out this paragraph, the agencies shall
negotiate an agreement to establish procedures for such
coordination, including procedures for providing advance
notice to the Bureau when the Commission is initiating a
rulemaking.
(j) Exclusion for Persons Regulated by the Commodity
Futures Trading Commission.--
(1) In general.--No provision of this title shall be
construed as altering, amending, or affecting the authority
of the Commodity Futures Trading Commission to adopt rules,
initiate enforcement proceedings, or take any other action
with respect to a person regulated by the Commodity Futures
Trading Commission. The Bureau shall have no authority to
exercise any power to enforce this title with respect to a
person regulated by the Commodity Futures Trading Commission.
(2) Consultation and coordination.--Notwithstanding
paragraph (1), the Commodity Futures Trading Commission shall
consult and coordinate with the Bureau with respect to any
rule (including any advance notice of proposed rulemaking)
regarding a product or service that is the same type of
product as, or that competes directly with, a consumer
financial product or service that is subject to the
jurisdiction of the Bureau under this title or under any
other law.
(k) Exclusion for Persons Regulated by the Farm Credit
Administration.--
(1) In general.--No provision of this title shall be
construed as altering, amending, or affecting the authority
of the Farm Credit Administration to adopt rules, initiate
enforcement proceedings, or take any other action with
respect to a person regulated by the Farm Credit
Administration. The Bureau shall have no authority to
exercise any power to enforce this title with respect to a
person regulated by the Farm Credit Administration.
(2) Definition.--For purposes of this subsection, the term
``person regulated by the Farm Credit Administration'' means
any Farm Credit System institution that is chartered and
subject to the provisions of the Farm Credit Act of 1971 (12
U.S.C. 2001 et seq.).
(l) Exclusion for Activities Relating to Charitable
Contributions.--
(1) In general.--The Director and the Bureau may not
exercise any rulemaking, supervisory, enforcement, or other
authority, including authority to order penalties, over any
activities related to the solicitation or making of voluntary
contributions to a tax-exempt organization as recognized by
the Internal Revenue Service, by any agent, volunteer, or
representative of such organizations to the extent the
organization, agent, volunteer, or representative thereof is
soliciting or providing advice, information, education, or
instruction to any donor or potential donor relating to a
contribution to the organization.
(2) Limitation.--The exclusion in paragraph (1) does not
apply to other activities not described in paragraph (1) that
are the offering or provision of any consumer financial
product or service, or are otherwise subject to any
enumerated consumer law or any law for which authorities are
transferred under subtitle F or H.
(m) Insurance.--The Bureau may not define as a financial
product or service, by regulation or otherwise, engaging in
the business of insurance.
(n) Limited Authority of the Bureau.--Notwithstanding
subsections (a) through (h) and (l), a person subject to or
described in one or more of such subsections--
(1) may be a service provider; and
(2) may be subject to requests from, or requirements
imposed by, the Bureau regarding information in order to
carry out the responsibilities and functions of the Bureau
and in accordance with section 1022, 1052, or 1053.
(o) No Authority To Impose Usury Limit.--No provision of
this title shall be construed as conferring authority on the
Bureau to establish a usury limit applicable to an extension
of credit offered or made by a covered person to a consumer,
unless explicitly authorized by law.
(p) Attorney General.--No provision of this title,
including section 1024(c)(1), shall affect the authorities of
the Attorney General under otherwise applicable provisions of
law.
(q) Secretary of the Treasury.--No provision of this title
shall affect the authorities of the Secretary, including with
respect to prescribing rules, initiating enforcement
proceedings, or taking other actions with respect to a person
that performs income tax preparation activities for
consumers.
(r) Deposit Insurance and Share Insurance.--Nothing in this
title shall affect the authority of the Corporation under the
Federal Deposit Insurance Act or the National Credit Union
Administration Board under the Federal Credit Union Act as to
matters related to deposit insurance and share insurance,
respectively.

SEC. 1028. AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE
ARBITRATION.

(a) Study and Report.--The Bureau shall conduct a study of,
and shall provide a report to Congress concerning, the use of
agreements providing for arbitration of any future dispute
between covered persons and consumers in connection with the
offering or providing of consumer financial products or
services.
(b) Further Authority.--The Bureau, by regulation, may
prohibit or impose conditions or limitations on the use of an
agreement between a covered person and a consumer for a
consumer financial product or service providing for
arbitration of any future dispute between the parties, if the
Bureau finds that such a prohibition or imposition of
conditions or limitations is in the public interest and for
the protection of consumers. The findings in such rule shall
be consistent with the study conducted under subsection (a).
(c) Limitation.--The authority described in subsection (b)
may not be construed to prohibit or restrict a consumer from
entering into a voluntary arbitration agreement with a
covered person after a dispute has arisen.
(d) Effective Date.--Notwithstanding any other provision of
law, any regulation prescribed by the Bureau under subsection
(a) shall apply, consistent with the terms of the regulation,
to any agreement between a consumer and a covered person
entered into after the end of the 180-day period beginning on
the effective date of the regulation, as established by the
Bureau.

SEC. 1029. EFFECTIVE DATE.

This subtitle shall become effective on the designated
transfer date.

Subtitle C--Specific Bureau Authorities

SEC. 1031. PROHIBITING UNFAIR, DECEPTIVE, OR ABUSIVE ACTS OR
PRACTICES.

(a) In General.--The Bureau may take any action authorized
under subtitle E to prevent a covered person or service
provider from committing or engaging in an unfair, deceptive,
or abusive act or practice under Federal law in connection
with any transaction with a consumer for a consumer financial
product or service, or the offering of a consumer financial
product or service.
(b) Rulemaking.--The Bureau may prescribe rules applicable
to a covered person or

[[Page S2946]]

service provider identifying as unlawful unfair, deceptive,
or abusive acts or practices in connection with any
transaction with a consumer for a consumer financial product
or service, or the offering of a consumer financial product
or service. Rules under this section may include requirements
for the purpose of preventing such acts or practices.
(c) Unfairness.--
(1) In general.--The Bureau shall have no authority under
this section to declare an act or practice in connection with
a transaction with a consumer for a consumer financial
product or service, or the offering of a consumer financial
product or service, to be unlawful on the grounds that such
act or practice is unfair, unless the Bureau has a reasonable
basis to conclude that--
(A) the act or practice causes or is likely to cause
substantial injury to consumers which is not reasonably
avoidable by consumers; and
(B) such substantial injury is not outweighed by
countervailing benefits to consumers or to competition.
(2) Consideration of public policies.--In determining
whether an act or practice is unfair, the Bureau may consider
established public policies as evidence to be considered with
all other evidence. Such public policy considerations may not
serve as a primary basis for such determination.
(d) Abusive.--The Bureau shall have no authority under this
section to declare an act or practice abusive in connection
with the provision of a consumer financial product or
service, unless the act or practice--
(1) materially interferes with the ability of a consumer to
understand a term or condition of a consumer financial
product or service; or
(2) takes unreasonable advantage of--
(A) a lack of understanding on the part of the consumer of
the material risks, costs, or conditions of the product or
service;
(B) the inability of the consumer to protect the interests
of the consumer in selecting or using a consumer financial
product or service; or
(C) the reasonable reliance by the consumer on a covered
person to act in the interests of the consumer.
(e) Consultation.--In prescribing rules under this section,
the Bureau shall consult with the Federal banking agencies,
or other Federal agencies, as appropriate, concerning the
consistency of the proposed rule with prudential, market, or
systemic objectives administered by such agencies.

SEC. 1032. DISCLOSURES.

(a) In General.--The Bureau may prescribe rules to ensure
that the features of any consumer financial product or
service, both initially and over the term of the product or
service, are fully, accurately, and effectively disclosed to
consumers in a manner that permits consumers to understand
the costs, benefits, and risks associated with the product or
service, in light of the facts and circumstances.
(b) Model Disclosures.--
(1) In general.--Any final rule prescribed by the Bureau
under this section requiring disclosures may include a model
form that may be used at the option of the covered person for
provision of the required disclosures.
(2) Format.--A model form issued pursuant to paragraph (1)
shall contain a clear and conspicuous disclosure that, at a
minimum--
(A) uses plain language comprehensible to consumers;
(B) contains a clear format and design, such as an easily
readable type font; and
(C) succinctly explains the information that must be
communicated to the consumer.
(3) Consumer testing.--Any model form issued pursuant to
this subsection shall be validated through consumer testing.
(c) Basis for Rulemaking.--In prescribing rules under this
section, the Bureau shall consider available evidence about
consumer awareness, understanding of, and responses to
disclosures or communications about the risks, costs, and
benefits of consumer financial products or services.
(d) Safe Harbor.--Any covered person that uses a model form
included with a rule issued under this section shall be
deemed to be in compliance with the disclosure requirements
of this section with respect to such model form.
(e) Trial Disclosure Programs.--
(1) In general.--The Bureau may permit a covered person to
conduct a trial program that is limited in time and scope,
subject to specified standards and procedures, for the
purpose of providing trial disclosures to consumers that are
designed to improve upon any model form issued pursuant to
subsection (b)(1), or any other model form issued to
implement an enumerated statute, as applicable.
(2) Safe harbor.--The standards and procedures issued by
the Bureau shall be designed to encourage covered persons to
conduct trial disclosure programs. For the purposes of
administering this subsection, the Bureau may establish a
limited period during which a covered person conducting a
trial disclosure program shall be deemed to be in compliance
with, or may be exempted from, a requirement of a rule or an
enumerated consumer law.
(3) Public disclosure.--The rules of the Bureau shall
provide for public disclosure of trial disclosure programs,
which public disclosure may be limited, to the extent
necessary to encourage covered persons to conduct effective
trials.
(f) Combined Mortgage Loan Disclosure.--Not later than 1
year after the designated transfer date, the Bureau shall
propose for public comment rules and model disclosures that
combine the disclosures required under the Truth in Lending
Act and the Real Estate Settlement Procedures Act of 1974,
into a single, integrated disclosure for mortgage loan
transactions covered by those laws, unless the Bureau
determines that any proposal issued by the Board of Governors
and the Secretary of Housing and Urban Development carries
out the same purpose.

SEC. 1033. CONSUMER RIGHTS TO ACCESS INFORMATION.

(a) In General.--Subject to rules prescribed by the Bureau,
a covered person shall make available to a consumer, upon
request, information in the control or possession of the
covered person concerning the consumer financial product or
service that the consumer obtained from such covered person,
including information relating to any transaction, series of
transactions, or to the account including costs, charges and
usage data. The information shall be made available in an
electronic form usable by consumers.
(b) Exceptions.--A covered person may not be required by
this section to make available to the consumer--
(1) any confidential commercial information, including an
algorithm used to derive credit scores or other risk scores
or predictors;
(2) any information collected by the covered person for the
purpose of preventing fraud or money laundering, or
detecting, or making any report regarding other unlawful or
potentially unlawful conduct;
(3) any information required to be kept confidential by any
other provision of law; or
(4) any information that the covered person cannot retrieve
in the ordinary course of its business with respect to that
information.
(c) No Duty To Maintain Records.--Nothing in this section
shall be construed to impose any duty on a covered person to
maintain or keep any information about a consumer.
(d) Standardized Formats for Data.--The Bureau, by rule,
shall prescribe standards applicable to covered persons to
promote the development and use of standardized formats for
information, including through the use of machine readable
files, to be made available to consumers under this section.
(e) Consultation.--The Bureau shall, when prescribing any
rule under this section, consult with the Federal banking
agencies and the Federal Trade Commission to ensure that the
rules--
(1) impose substantively similar requirements on covered
persons;
(2) take into account conditions under which covered
persons do business both in the United States and in other
countries; and
(3) do not require or promote the use of any particular
technology in order to develop systems for compliance.

SEC. 1034. RESPONSE TO CONSUMER COMPLAINTS AND INQUIRIES.

(a) Timely Regulator Response to Consumers.--The Bureau
shall establish, in consultation with the appropriate Federal
regulatory agencies, reasonable procedures to provide a
timely response to consumers, in writing where appropriate,
to complaints against, or inquiries concerning, a covered
person, including--
(1) all steps that have been taken by the regulator in
response to the complaint or inquiry of the consumer;
(2) any responses received by the regulator from the
covered person; and
(3) any follow-up actions or planned follow-up actions by
the regulator in response to the complaint or inquiry of the
consumer.
(b) Timely Response to Regulator by Covered Person.--A
covered person subject to supervision and primary enforcement
by the Bureau pursuant to section 1025 shall provide a timely
response, in writing where appropriate, to the Bureau, the
prudential regulators, and any other agency having
jurisdiction over such covered person concerning a consumer
complaint or inquiry, including--
(1) steps that have been taken by the covered person to
respond to the complaint or inquiry of the consumer;
(2) responses received by the covered person from the
consumer; and
(3) follow-up actions or planned follow-up actions by the
covered person to respond to the complaint or inquiry of the
consumer.
(c) Provision of Information to Consumers.--
(1) In general.--A covered person subject to supervision
and primary enforcement by the Bureau pursuant to section
1025 shall, in a timely manner, comply with a consumer
request for information in the control or possession of such
covered person concerning the consumer financial product or
service that the consumer obtained from such covered person,
including supporting written documentation, concerning the
account of the consumer.
(2) Exceptions.--A covered person subject to supervision
and primary enforcement by the Bureau pursuant to section
1025, a prudential regulator, and any other agency having
jurisdiction over a covered person subject to supervision and
primary enforcement by the Bureau pursuant to section 1025
may not be required by this section to make available to the
consumer--
(A) any confidential commercial information, including an
algorithm used to derive

[[Page S2947]]

credit scores or other risk scores or predictors;
(B) any information collected by the covered person for the
purpose of preventing fraud or money laundering, or detecting
or making any report regarding other unlawful or potentially
unlawful conduct;
(C) any information required to be kept confidential by any
other provision of law; or
(D) any nonpublic or confidential information, including
confidential supervisory information.
(d) Agreements With Other Agencies.--The Bureau shall enter
into a memorandum of understanding with any affected Federal
regulatory agency to establish procedures by which any
covered person, and the prudential regulators, and any other
agency having jurisdiction over a covered person, including
the Secretary of the Department of Housing and Urban
Development and the Secretary of Education, shall comply with
this section.

SEC. 1035. PRIVATE EDUCATION LOAN OMBUDSMAN.

(a) Establishment.--The Secretary, in consultation with the
Director, shall designate a Private Education Loan Ombudsman
(in this section referred to as the ``Ombudsman'') within the
Bureau, to provide timely assistance to borrowers of private
education loans.
(b) Public Information.--The Secretary and the Director
shall disseminate information about the availability and
functions of the Ombudsman to borrowers and potential
borrowers, as well as institutions of higher education,
lenders, guaranty agencies, loan servicers, and other
participants in private education student loan programs.
(c) Functions of Ombudsman.--The Ombudsman designated under
this subsection shall--
(1) in accordance with regulations of the Director,
receive, review, and attempt to resolve informally complaints
from borrowers of loans described in subsection (a),
including, as appropriate, attempts to resolve such
complaints in collaboration with the Department of Education
and with institutions of higher education, lenders, guaranty
agencies, loan servicers, and other participants in private
education loan programs;
(2) not later than 90 days after the designated transfer
date, establish a memorandum of understanding with the
student loan ombudsman established under section 141(f) of
the Higher Education Act of 1965 (20 U.S.C. 1018(f)), to
ensure coordination in providing assistance to and serving
borrowers seeking to resolve complaints related to their
private education or Federal student loans;
(3) compile and analyze data on borrower complaints
regarding private education loans; and
(4) make appropriate recommendations to the Director, the
Secretary, the Secretary of Education, the Committee on
Banking, Housing, and Urban Affairs and the Committee on
Health, Education, Labor, and Pensions of the Senate and the
Committee on Financial Services and the Committee on
Education and Labor of the House of Representatives.
(d) Annual Reports.--
(1) In general.--The Ombudsman shall prepare an annual
report that describes the activities, and evaluates the
effectiveness of the Ombudsman during the preceding year.
(2) Submission.--The report required by paragraph (1) shall
be submitted on the same date annually to the Secretary, the
Secretary of Education, the Committee on Banking, Housing,
and Urban Affairs and the Committee on Health, Education,
Labor, and Pensions of the Senate and the Committee on
Financial Services and the Committee on Education and Labor
of the House of Representatives.
(e) Definitions.--For purposes of this section, the terms
``private education loan'' and ``institution of higher
education'' have the same meanings as in section 140 of the
Truth in Lending Act (15 U.S.C. 1650).

SEC. 1036. PROHIBITED ACTS.

It shall be unlawful for any person--
(1) to--
(A) advertise, market, offer, or sell a consumer financial
product or service not in conformity with this title or
applicable rules or orders issued by the Bureau;
(B) enforce, or attempt to enforce, any agreement with a
consumer (including any term or change in terms in respect of
such agreement), or impose, or attempt to impose, any fee or
charge on a consumer in connection with a consumer financial
product or service that is not in conformity with this title
or applicable rules or orders issued by the Bureau; or
(C) engage in any unfair, deceptive, or abusive act or
practice,
except that no person shall be held to have violated this
paragraph solely by virtue of providing or selling time or
space to a person placing an advertisement;
(2) to fail or refuse, as required by Federal consumer
financial law, or any rule or order issued by the Bureau
thereunder--
(A) to permit access to or copying of records;
(B) to establish or maintain records; or
(C) to make reports or provide information to the Bureau;
or
(3) knowingly or recklessly to provide substantial
assistance to another person in violation of the provisions
of section 1031, or any rule or order issued thereunder, and
notwithstanding any provision of this title, the provider of
such substantial assistance shall be deemed to be in
violation of that section to the same extent as the person to
whom such assistance is provided.

SEC. 1037. EFFECTIVE DATE.

This subtitle shall take effect on the designated transfer
date.

Subtitle D--Preservation of State Law

SEC. 1041. RELATION TO STATE LAW.

(a) In General.--
(1) Rule of construction.--This title, other than sections
1044 through 1048, may not be construed as annulling,
altering, or affecting, or exempting any person subject to
the provisions of this title from complying with, the
statutes, regulations, orders, or interpretations in effect
in any State, except to the extent that any such provision of
law is inconsistent with the provisions of this title, and
then only to the extent of the inconsistency.
(2) Greater protection under state law.--For purposes of
this subsection, a statute, regulation, order, or
interpretation in effect in any State is not inconsistent
with the provisions of this title if the protection that such
statute, regulation, order, or interpretation affords to
consumers is greater than the protection provided under this
title. A determination regarding whether a statute,
regulation, order, or interpretation in effect in any State
is inconsistent with the provisions of this title may be made
by the Bureau on its own motion or in response to a
nonfrivolous petition initiated by any interested person.
(b) Relation to Other Provisions of Enumerated Consumer
Laws That Relate to State Law.--No provision of this title,
except as provided in section 1083, shall be construed as
modifying, limiting, or superseding the operation of any
provision of an enumerated consumer law that relates to the
application of a law in effect in any State with respect to
such Federal law.
(c) Additional Consumer Protection Regulations in Response
to State Action.--
(1) Notice of proposed rule required.--The Bureau shall
issue a notice of proposed rulemaking whenever a majority of
the States has enacted a resolution in support of the
establishment or modification of a consumer protection
regulation by the Bureau.
(2) Bureau considerations required for issuance of final
regulation.--Before prescribing a final regulation based upon
a notice issued pursuant to paragraph (1), the Bureau shall
take into account whether--
(A) the proposed regulation would afford greater protection
to consumers than any existing regulation;
(B) the intended benefits of the proposed regulation for
consumers would outweigh any increased costs or
inconveniences for consumers, and would not discriminate
unfairly against any category or class of consumers; and
(C) a Federal banking agency has advised that the proposed
regulation is likely to present an unacceptable safety and
soundness risk to insured depository institutions.
(3) Explanation of considerations.--The Bureau--
(A) shall include a discussion of the considerations
required in paragraph (2) in the Federal Register notice of a
final regulation prescribed pursuant to this subsection; and
(B) whenever the Bureau determines not to prescribe a final
regulation, shall publish an explanation of such
determination in the Federal Register, and provide a copy of
such explanation to each State that enacted a resolution in
support of the proposed regulation, the Committee on
Financial Services of the House of Representatives, and the
Committee on Banking, Housing, and Urban Affairs of the
Senate.
(4) Reservation of authority.--No provision of this
subsection shall be construed as limiting or restricting the
authority of the Bureau to enhance consumer protection
standards established pursuant to this title in response to
its own motion or in response to a request by any other
interested person.
(5) Rule of construction.--No provision of this subsection
shall be construed as exempting the Bureau from complying
with subchapter II of chapter 5 of title 5, United States
Code.
(6) Definition.--For purposes of this subsection, the term
``consumer protection regulation'' means a regulation that
the Bureau is authorized to prescribe under the Federal
consumer financial laws.

SEC. 1042. PRESERVATION OF ENFORCEMENT POWERS OF STATES.

(a) In General.--
(1) Action by state.--The attorney general (or the
equivalent thereof) of any State may bring a civil action in
the name of such State, as parens patriae on behalf of
natural persons residing in such State, in any district court
of the United States in that State or in State court having
jurisdiction over the defendant, to enforce provisions of
this title or regulations issued thereunder and to secure
remedies under provisions of this title or remedies otherwise
provided under other law. A State regulator may bring a civil
action or other appropriate proceeding to enforce the
provisions of this title or regulations issued thereunder
with respect to any entity that is State-chartered,
incorporated, licensed, or otherwise authorized to do
business under State law, and to secure remedies under
provisions of this title or remedies otherwise provided under
other provisions of law with respect to a State-chartered
entity.
(2) Rule of construction.--No provision of this title shall
be construed as modifying, limiting, or superseding the
operation of any provision of an enumerated consumer law that
relates to the authority of a State attorney general or State
regulator to enforce such Federal law.

[[Page S2948]]

(b) Consultation Required.--
(1) Notice.--
(A) In general.--Before initiating any action in a court or
other administrative or regulatory proceeding against any
covered person to enforce any provision of this title,
including any regulation prescribed by the Director under
this title, a State attorney general or State regulator shall
timely provide a copy of the complete complaint to be filed
and written notice describing such action or proceeding to
the Bureau and the prudential regulator, if any, or the
designee thereof.
(B) Emergency action.--If prior notice is not practicable,
the State attorney general or State regulator shall provide a
copy of the complete complaint and the notice to the Bureau
and the prudential regulator, if any, immediately upon
instituting the action or proceeding.
(C) Contents of notice.--The notification required under
this paragraph shall, at a minimum, describe--
(i) the identity of the parties;
(ii) the alleged facts underlying the proceeding; and
(iii) whether there may be a need to coordinate the
prosecution of the proceeding so as not to interfere with any
action, including any rulemaking, undertaken by the Director,
a prudential regulator, or another Federal agency.
(2) Bureau response.--In any action described in paragraph
(1), the Bureau may--
(A) intervene in the action as a party;
(B) upon intervening--
(i) remove the action to the appropriate United States
district court, if the action was not originally brought
there; and
(ii) be heard on all matters arising in the action; and
(C) appeal any order or judgment, to the same extent as any
other party in the proceeding may.
(c) Regulations.--The Director shall prescribe regulations
to implement the requirements of this section and, from time
to time, provide guidance in order to further coordinate
actions with the State attorneys general and other
regulators.
(d) Preservation of State Authority.--
(1) State claims.--No provision of this section shall be
construed as altering, limiting, or affecting the authority
of a State attorney general or any other regulatory or
enforcement agency or authority to bring an action or other
regulatory proceeding arising solely under the law in effect
in that State.
(2) State securities regulators.--No provision of this
title shall be construed as altering, limiting, or affecting
the authority of a State securities commission (or any agency
or office performing like functions) under State law to adopt
rules, initiate enforcement proceedings, or take any other
action with respect to a person regulated by such commission
or authority.
(3) State insurance regulators.--No provision of this title
shall be construed as altering, limiting, or affecting the
authority of a State insurance commission or State insurance
regulator under State law to adopt rules, initiate
enforcement proceedings, or take any other action with
respect to a person regulated by such commission or
regulator.

SEC. 1043. PRESERVATION OF EXISTING CONTRACTS.

This title, and regulations, orders, guidance, and
interpretations prescribed, issued, or established by the
Bureau, shall not be construed to alter or affect the
applicability of any regulation, order, guidance, or
interpretation prescribed, issued, and established by the
Comptroller of the Currency or the Director of the Office of
Thrift Supervision regarding the applicability of State law
under Federal banking law to any contract entered into on or
before the date of the enactment of this title, by national
banks, Federal savings associations, or subsidiaries thereof
that are regulated and supervised by the Comptroller of the
Currency or the Director of the Office of Thrift Supervision,
respectively.

SEC. 1044. STATE LAW PREEMPTION STANDARDS FOR NATIONAL BANKS
AND SUBSIDIARIES CLARIFIED.

(a) In General.--Chapter one of title LXII of the Revised
Statutes of the United States (12 U.S.C. 21 et seq.) is
amended by inserting after section 5136B the following new
section:

``SEC. 5136C. STATE LAW PREEMPTION STANDARDS FOR NATIONAL
BANKS AND SUBSIDIARIES CLARIFIED.

``(a) Definitions.--For purposes of this section, the
following definitions shall apply:
``(1) National bank.--The term `national bank' includes--
``(A) any bank organized under the laws of the United
States; and
``(B) any Federal branch established in accordance with the
International Banking Act of 1978.
``(2) State consumer financial laws.--The term `State
consumer financial law' means a State law that does not
directly or indirectly discriminate against national banks
and that directly and specifically regulates the manner,
content, or terms and conditions of any financial transaction
(as may be authorized for national banks to engage in), or
any account related thereto, with respect to a consumer.
``(3) Other definitions.--The terms `affiliate',
`subsidiary', `includes', and `including' have the same
meanings as in section 3 of the Federal Deposit Insurance
Act.
``(b) Preemption Standard.--
``(1) In general.--State consumer financial laws are
preempted, only if--
``(A) application of a State consumer financial law would
have a discriminatory effect on national banks, in comparison
with the effect of the law on a bank chartered by that State;
``(B) the preemption of the State consumer financial law is
in accordance with the legal standard of the decision of the
Supreme Court of the United States in Barnett Bank of Marion
County, N.A. v. Nelson, Florida Insurance Commissioner, et
al, 517 U.S. 25 (1996), and a preemption determination under
this subparagraph may be made by a court or by regulation or
order of the Comptroller of the Currency, in accordance with
applicable law, on a case-by-case basis, and any such
determination by a court shall comply with the standards set
forth in subsection (d), with the court making the finding
under subsection (d), de novo; or
``(C) the State consumer financial law is preempted by a
provision of Federal law other than this title.
``(2) Savings clause.--This title does not preempt, annul,
or affect the applicability of any State law to any
subsidiary or affiliate of a national bank (other than a
subsidiary or affiliate that is chartered as a national
bank).
``(3) Case-by-case basis.--
``(A) Definition.--As used in this section the term `case-
by-case basis' refers to a determination pursuant to this
section made by the Comptroller concerning the impact of a
particular State consumer financial law on any national bank
that is subject to that law, or the law of any other State
with substantively equivalent terms.
``(B) Consultation.--When making a determination on a case-
by-case basis that a State consumer financial law of another
State has substantively equivalent terms as one that the
Comptroller is preempting, the Comptroller shall first
consult with the Bureau of Consumer Financial Protection and
shall take the views of the Bureau into account when making
the determination.
``(4) Rule of construction.--This title does not occupy the
field in any area of State law.
``(5) Standards of review.--
``(A) Preemption.--A court reviewing any determinations
made by the Comptroller regarding preemption of a State law
by this title shall assess the validity of such
determinations, depending upon the thoroughness evident in
the consideration of the agency, the validity of the
reasoning of the agency, the consistency with other valid
determinations made by the agency, and other factors which
the court finds persuasive and relevant to its decision.
``(B) Savings clause.--Except as provided in subparagraph
(A), nothing in this section shall affect the deference that
a court may afford to the Comptroller in making
determinations regarding the meaning or interpretation of
title LXII of the Revised Statutes of the United States or
other Federal laws.
``(6) Comptroller determination not delegable.--Any
regulation, order, or determination made by the Comptroller
of the Currency under paragraph (1)(B) shall be made by the
Comptroller, and shall not be delegable to another officer or
employee of the Comptroller of the Currency.
``(c) Substantial Evidence.--No regulation or order of the
Comptroller of the Currency prescribed under subsection
(b)(1)(B), shall be interpreted or applied so as to
invalidate, or otherwise declare inapplicable to a national
bank, the provision of the State consumer financial law,
unless substantial evidence, made on the record of the
proceeding, supports the specific finding regarding the
preemption of such provision in accordance with the legal
standard of the decision of the Supreme Court of the United
States in Barnett Bank of Marion County, N.A. v. Nelson,
Florida Insurance Commissioner, et al., 517 U.S. 25 (1996).
``(d) Other Federal Laws.--Notwithstanding any other
provision of law, the Comptroller of the Currency may not
prescribe a regulation or order pursuant to subsection
(b)(1)(B) until the Comptroller of the Currency, after
consultation with the Director of the Bureau of Consumer
Financial Protection, makes a finding, in writing, that a
Federal law provides a substantive standard, applicable to a
national bank, which regulates the particular conduct,
activity, or authority that is subject to such provision of
the State consumer financial law.
``(e) Periodic Review of Preemption Determinations.--
``(1) In general.--The Comptroller of the Currency shall
periodically conduct a review, through notice and public
comment, of each determination that a provision of Federal
law preempts a State consumer financial law. The agency shall
conduct such review within the 5-year period after
prescribing or otherwise issuing such determination, and at
least once during each 5-year period thereafter. After
conducting the review of, and inspecting the comments made
on, the determination, the agency shall publish a notice in
the Federal Register announcing the decision to continue or
rescind the determination or a proposal to amend the
determination. Any such notice of a proposal to amend a
determination and the subsequent resolution of such proposal
shall comply with the procedures set forth in subsections (a)
and (b) of section 5244 of the Revised Statutes of the United
States (12 U.S.C. 43 (a), (b)).
``(2) Reports to congress.--At the time of issuing a review
conducted under paragraph (1), the Comptroller of the
Currency shall

[[Page S2949]]

submit a report regarding such review to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the
Senate. The report submitted to the respective committees
shall address whether the agency intends to continue,
rescind, or propose to amend any determination that a
provision of Federal law preempts a State consumer financial
law, and the reasons therefor.
``(f) Application of State Consumer Financial Law to
Subsidiaries and Affiliates.--Notwithstanding any provision
of this title, a State consumer financial law shall apply to
a subsidiary or affiliate of a national bank (other than a
subsidiary or affiliate that is chartered as a national bank)
to the same extent that the State consumer financial law
applies to any person, corporation, or other entity subject
to such State law.
``(g) Preservation of Powers Related to Charging
Interest.--No provision of this title shall be construed as
altering or otherwise affecting the authority conferred by
section 5197 of the Revised Statutes of the United States (12
U.S.C. 85) for the charging of interest by a national bank at
the rate allowed by the laws of the State, territory, or
district where the bank is located, including with respect to
the meaning of `interest' under such provision.
``(h) Transparency of OCC Preemption Determinations.--The
Comptroller of the Currency shall publish and update no less
frequently than quarterly, a list of preemption
determinations by the Comptroller of the Currency then in
effect that identifies the activities and practices covered
by each determination and the requirements and constraints
determined to be preempted.''.
(b) Clerical Amendment.--The table of sections for chapter
one of title LXII of the Revised Statutes of the United
States is amended by inserting after the item relating to
section 5136B the following new item:

``Sec. 5136C. State law preemption standards for national banks and
subsidiaries clarified.''.

SEC. 1045. CLARIFICATION OF LAW APPLICABLE TO NONDEPOSITORY
INSTITUTION SUBSIDIARIES.

Section 5136C of the Revised Statutes of the United States
(as added by this subtitle) is amended by adding at the end
the following:
``(i) Clarification of Law Applicable to Nondepository
Institution Subsidiaries and Affiliates of National Banks.--
``(1) Definitions.--For purposes of this subsection, the
terms `depository institution', `subsidiary', and `affiliate'
have the same meanings as in section 3 of the Federal Deposit
Insurance Act.
``(2) Rule of construction.--No provision of this title
shall be construed as preempting, annulling, or affecting the
applicability of State law to any subsidiary, affiliate, or
agent of a national bank (other than a subsidiary, affiliate,
or agent that is chartered as a national bank).''.

SEC. 1046. STATE LAW PREEMPTION STANDARDS FOR FEDERAL SAVINGS
ASSOCIATIONS AND SUBSIDIARIES CLARIFIED.

(a) In General.--The Home Owners' Loan Act (12 U.S.C. 1461
et seq.) is amended by inserting after section 5 the
following new section:

``SEC. 6. STATE LAW PREEMPTION STANDARDS FOR FEDERAL SAVINGS
ASSOCIATIONS CLARIFIED.

``(a) In General.--Any determination by a court or by the
Director or any successor officer or agency regarding the
relation of State law to a provision of this Act or any
regulation or order prescribed under this Act shall be made
in accordance with the laws and legal standards applicable to
national banks regarding the preemption of State law.
``(b) Principles of Conflict Preemption Applicable.--
Notwithstanding the authorities granted under sections 4 and
5, this Act does not occupy the field in any area of State
law.''.
(b) Clerical Amendment.--The table of sections for the Home
Owners' Loan Act (12 U.S.C. 1461 et seq.) is amended by
striking the item relating to section 6 and inserting the
following new item:

``Sec. 6.. State law preemption standards for Federal savings
associations and subsidiaries clarified.''.

SEC. 1047. VISITORIAL STANDARDS FOR NATIONAL BANKS AND
SAVINGS ASSOCIATIONS.

(a) National Banks.--Section 5136C of the Revised Statutes
of the United States (as added by this subtitle) is amended
by adding at the end the following:
``(j) Visitorial Powers.--
``(1) In general.--No provision of this title which relates
to visitorial powers to which any national bank is subject
shall be construed as limiting or restricting the authority
of any attorney general (or other chief law enforcement
officer) of any State to bring any action in any court of
appropriate jurisdiction, as authorized under section
5240(a)--
``(A) to enforce any applicable provision of Federal or
State law, as authorized by such law; or
``(B) on behalf of residents of such State, to enforce any
applicable provision of any Federal or nonpreempted State law
against a national bank, as authorized by such law, or to
seek relief for such residents from any violation of any such
law by any national bank.
``(2) Prior consultation with occ required.--The attorney
general (or other chief law enforcement officer) of any State
shall consult with the Comptroller of the Currency before
acting under paragraph (1).
``(k) Enforcement Actions.--The ability of the Comptroller
of the Currency to bring an enforcement action under this
title or section 5 of the Federal Trade Commission Act does
not preclude any private party from enforcing rights granted
under Federal or State law in the courts.''.
(b) Savings Associations.--Section 6 of the Home Owners'
Loan Act (as added by this title) is amended by adding at the
end the following:
``(c) Visitorial Powers.--
``(1) In general.--No provision of this Act shall be
construed as limiting or restricting the authority of any
attorney general (or other chief law enforcement officer) of
any State to bring any action in any court of appropriate
jurisdiction--
``(A) to enforce any applicable provision of Federal or
State law, as authorized by such law; or
``(B) on behalf of residents of such State, to enforce any
applicable provision of any Federal or nonpreempted State law
against a Federal savings association, as authorized by such
law, or to seek relief for such residents from any violation
of any such law by any Federal savings association.
``(2) Prior consultation with occ required.--The attorney
general (or other chief law enforcement officer) of any State
shall consult with the Comptroller of the Currency before
acting under paragraph (1).
``(d) Enforcement Actions.--The ability of the Comptroller
of the Currency to bring an enforcement action under this Act
or section 5 of the Federal Trade Commission Act does not
preclude any private party from enforcing rights granted
under Federal or State law in the courts.''.

SEC. 1048. EFFECTIVE DATE.

This subtitle shall become effective on the designated
transfer date.

Subtitle E--Enforcement Powers

SEC. 1051. DEFINITIONS.

For purposes of this subtitle, the following definitions
shall apply:
(1) Bureau investigation.--The term ``Bureau
investigation'' means any inquiry conducted by a Bureau
investigator for the purpose of ascertaining whether any
person is or has been engaged in any conduct that is a
violation, as defined in this section.
(2) Bureau investigator.--The term ``Bureau investigator''
means any attorney or investigator employed by the Bureau who
is charged with the duty of enforcing or carrying into effect
any Federal consumer financial law.
(3) Civil investigative demand and demand.--The terms
``civil investigative demand'' and ``demand'' mean any demand
issued by the Bureau.
(4) Custodian.--The term ``custodian'' means the custodian
or any deputy custodian designated by the Bureau.
(5) Documentary material.--The term ``documentary
material'' includes the original or any copy of any book,
document, record, report, memorandum, paper, communication,
tabulation, chart, logs, electronic files, or other data or
data compilations stored in any medium.
(6) Violation.--The term ``violation'' means any act or
omission that, if proved, would constitute a violation of any
provision of Federal consumer financial law.

SEC. 1052. INVESTIGATIONS AND ADMINISTRATIVE DISCOVERY.

(a) Joint Investigations.--
(1) In general.--The Bureau or, where appropriate, a Bureau
investigator, may engage in joint investigations and requests
for information, as authorized under this title.
(2) Fair lending.--The authority under paragraph (1)
includes matters relating to fair lending, and where
appropriate, joint investigations with, and requests for
information from, the Secretary of Housing and Urban
Development, the Attorney General of the United States, or
both.
(b) Subpoenas.--
(1) In general.--The Bureau or a Bureau investigator may
issue subpoenas for the attendance and testimony of witnesses
and the production of relevant papers, books, documents, or
other material in connection with hearings under this title.
(2) Failure to obey.--In the case of contumacy or refusal
to obey a subpoena issued pursuant to this paragraph and
served upon any person, the district court of the United
States for any district in which such person is found,
resides, or transacts business, upon application by the
Bureau or a Bureau investigator and after notice to such
person, may issue an order requiring such person to appear
and give testimony or to appear and produce documents or
other material.
(3) Contempt.--Any failure to obey an order of the court
under this subsection may be punished by the court as a
contempt thereof.
(c) Demands.--
(1) In general.--Whenever the Bureau has reason to believe
that any person may be in possession, custody, or control of
any documentary material or tangible things, or may have any
information, relevant to a violation, the Bureau may, before
the institution of any proceedings under the Federal consumer
financial law, issue in writing, and cause to be served upon
such person, a civil investigative demand requiring such
person to--
(A) produce such documentary material for inspection and
copying or reproduction in

[[Page S2950]]

the form or medium requested by the Bureau;
(B) submit such tangible things;
(C) file written reports or answers to questions;
(D) give oral testimony concerning documentary material,
tangible things, or other information; or
(E) furnish any combination of such material, answers, or
testimony.
(2) Requirements.--Each civil investigative demand shall
state the nature of the conduct constituting the alleged
violation which is under investigation and the provision of
law applicable to such violation.
(3) Production of documents.--Each civil investigative
demand for the production of documentary material shall--
(A) describe each class of documentary material to be
produced under the demand with such definiteness and
certainty as to permit such material to be fairly identified;
(B) prescribe a return date or dates which will provide a
reasonable period of time within which the material so
demanded may be assembled and made available for inspection
and copying or reproduction; and
(C) identify the custodian to whom such material shall be
made available.
(4) Production of things.--Each civil investigative demand
for the submission of tangible things shall--
(A) describe each class of tangible things to be submitted
under the demand with such definiteness and certainty as to
permit such things to be fairly identified;
(B) prescribe a return date or dates which will provide a
reasonable period of time within which the things so demanded
may be assembled and submitted; and
(C) identify the custodian to whom such things shall be
submitted.
(5) Demand for written reports or answers.--Each civil
investigative demand for written reports or answers to
questions shall--
(A) propound with definiteness and certainty the reports to
be produced or the questions to be answered;
(B) prescribe a date or dates at which time written reports
or answers to questions shall be submitted; and
(C) identify the custodian to whom such reports or answers
shall be submitted.
(6) Oral testimony.--Each civil investigative demand for
the giving of oral testimony shall--
(A) prescribe a date, time, and place at which oral
testimony shall be commenced; and
(B) identify a Bureau investigator who shall conduct the
investigation and the custodian to whom the transcript of
such investigation shall be submitted.
(7) Service.--Any civil investigative demand and any
enforcement petition filed under this section may be served--
(A) by any Bureau investigator at any place within the
territorial jurisdiction of any court of the United States;
and
(B) upon any person who is not found within the territorial
jurisdiction of any court of the United States--
(i) in such manner as the Federal Rules of Civil Procedure
prescribe for service in a foreign nation; and
(ii) to the extent that the courts of the United States
have authority to assert jurisdiction over such person,
consistent with due process, the United States District Court
for the District of Columbia shall have the same jurisdiction
to take any action respecting compliance with this section by
such person that such district court would have if such
person were personally within the jurisdiction of such
district court.
(8) Method of service.--Service of any civil investigative
demand or any enforcement petition filed under this section
may be made upon a person, including any legal entity, by--
(A) delivering a duly executed copy of such demand or
petition to the individual or to any partner, executive
officer, managing agent, or general agent of such person, or
to any agent of such person authorized by appointment or by
law to receive service of process on behalf of such person;
(B) delivering a duly executed copy of such demand or
petition to the principal office or place of business of the
person to be served; or
(C) depositing a duly executed copy in the United States
mails, by registered or certified mail, return receipt
requested, duly addressed to such person at the principal
office or place of business of such person.
(9) Proof of service.--
(A) In general.--A verified return by the individual
serving any civil investigative demand or any enforcement
petition filed under this section setting forth the manner of
such service shall be proof of such service.
(B) Return receipts.--In the case of service by registered
or certified mail, such return shall be accompanied by the
return post office receipt of delivery of such demand or
enforcement petition.
(10) Production of documentary material.--The production of
documentary material in response to a civil investigative
demand shall be made under a sworn certificate, in such form
as the demand designates, by the person, if a natural person,
to whom the demand is directed or, if not a natural person,
by any person having knowledge of the facts and circumstances
relating to such production, to the effect that all of the
documentary material required by the demand and in the
possession, custody, or control of the person to whom the
demand is directed has been produced and made available to
the custodian.
(11) Submission of tangible things.--The submission of
tangible things in response to a civil investigative demand
shall be made under a sworn certificate, in such form as the
demand designates, by the person to whom the demand is
directed or, if not a natural person, by any person having
knowledge of the facts and circumstances relating to such
production, to the effect that all of the tangible things
required by the demand and in the possession, custody, or
control of the person to whom the demand is directed have
been submitted to the custodian.
(12) Separate answers.--Each reporting requirement or
question in a civil investigative demand shall be answered
separately and fully in writing under oath, unless it is
objected to, in which event the reasons for the objection
shall be stated in lieu of an answer, and it shall be
submitted under a sworn certificate, in such form as the
demand designates, by the person, if a natural person, to
whom the demand is directed or, if not a natural person, by
any person responsible for answering each reporting
requirement or question, to the effect that all information
required by the demand and in the possession, custody,
control, or knowledge of the person to whom the demand is
directed has been submitted.
(13) Testimony.--
(A) In general.--
(i) Oath or affirmation.--Any Bureau investigator before
whom oral testimony is to be taken shall put the witness
under oath or affirmation, and shall personally, or by any
individual acting under the direction of and in the presence
of the Bureau investigator, record the testimony of the
witness.
(ii) Transcription.--The testimony shall be taken
stenographically and transcribed.
(iii) Transmission to custodian.--After the testimony is
fully transcribed, the Bureau investigator before whom the
testimony is taken shall promptly transmit a copy of the
transcript of the testimony to the custodian.
(B) Parties present.--Any Bureau investigator before whom
oral testimony is to be taken shall exclude from the place
where the testimony is to be taken all other persons, except
the person giving the testimony, the attorney of that person,
the officer before whom the testimony is to be taken, and any
stenographer taking such testimony.
(C) Location.--The oral testimony of any person taken
pursuant to a civil investigative demand shall be taken in
the judicial district of the United States in which such
person resides, is found, or transacts business, or in such
other place as may be agreed upon by the Bureau investigator
before whom the oral testimony of such person is to be taken
and such person.
(D) Attorney representation.--
(i) In general.--Any person compelled to appear under a
civil investigative demand for oral testimony pursuant to
this section may be accompanied, represented, and advised by
an attorney.
(ii) Authority.--The attorney may advise a person described
in clause (i), in confidence, either upon the request of such
person or upon the initiative of the attorney, with respect
to any question asked of such person.
(iii) Objections.--A person described in clause (i), or the
attorney for that person, may object on the record to any
question, in whole or in part, and such person shall briefly
state for the record the reason for the objection. An
objection may properly be made, received, and entered upon
the record when it is claimed that such person is entitled to
refuse to answer the question on grounds of any
constitutional or other legal right or privilege, including
the privilege against self-incrimination, but such person
shall not otherwise object to or refuse to answer any
question, and such person or attorney shall not otherwise
interrupt the oral examination.
(iv) Refusal to answer.--If a person described in clause
(i) refuses to answer any question--

(I) the Bureau may petition the district court of the
United States pursuant to this section for an order
compelling such person to answer such question; and
(II) on grounds of the privilege against self-
incrimination, the testimony of such person may be compelled
in accordance with the provisions of section 6004 of title
18, United States Code.

(E) Transcripts.--For purposes of this subsection--
(i) after the testimony of any witness is fully
transcribed, the Bureau investigator shall afford the witness
(who may be accompanied by an attorney) a reasonable
opportunity to examine the transcript;
(ii) the transcript shall be read to or by the witness,
unless such examination and reading are waived by the
witness;
(iii) any changes in form or substance which the witness
desires to make shall be entered and identified upon the
transcript by the Bureau investigator, with a statement of
the reasons given by the witness for making such changes;
(iv) the transcript shall be signed by the witness, unless
the witness in writing waives the signing, is ill, cannot be
found, or refuses to sign; and
(v) if the transcript is not signed by the witness during
the 30-day period following the date on which the witness is
first afforded a reasonable opportunity to examine the
transcript, the Bureau investigator shall sign the transcript
and state on the record the fact of the waiver, illness,
absence of the

[[Page S2951]]

witness, or the refusal to sign, together with any reasons
given for the failure to sign.
(F) Certification by investigator.--The Bureau investigator
shall certify on the transcript that the witness was duly
sworn by him or her and that the transcript is a true record
of the testimony given by the witness, and the Bureau
investigator shall promptly deliver the transcript or send it
by registered or certified mail to the custodian.
(G) Copy of transcript.--The Bureau investigator shall
furnish a copy of the transcript (upon payment of reasonable
charges for the transcript) to the witness only, except that
the Bureau may for good cause limit such witness to
inspection of the official transcript of his testimony.
(H) Witness fees.--Any witness appearing for the taking of
oral testimony pursuant to a civil investigative demand shall
be entitled to the same fees and mileage which are paid to
witnesses in the district courts of the United States.
(d) Confidential Treatment of Demand Material.--
(1) In general.--Documentary materials and tangible things
received as a result of a civil investigative demand shall be
subject to requirements and procedures regarding
confidentiality, in accordance with rules established by the
Bureau.
(2) Disclosure to congress.--No rule established by the
Bureau regarding the confidentiality of materials submitted
to, or otherwise obtained by, the Bureau shall be intended to
prevent disclosure to either House of Congress or to an
appropriate committee of the Congress, except that the Bureau
is permitted to adopt rules allowing prior notice to any
party that owns or otherwise provided the material to the
Bureau and had designated such material as confidential.
(e) Petition for Enforcement.--
(1) In general.--Whenever any person fails to comply with
any civil investigative demand duly served upon him under
this section, or whenever satisfactory copying or
reproduction of material requested pursuant to the demand
cannot be accomplished and such person refuses to surrender
such material, the Bureau, through such officers or attorneys
as it may designate, may file, in the district court of the
United States for any judicial district in which such person
resides, is found, or transacts business, and serve upon such
person, a petition for an order of such court for the
enforcement of this section.
(2) Service of process.--All process of any court to which
application may be made as provided in this subsection may be
served in any judicial district.
(f) Petition for Order Modifying or Setting Aside Demand.--
(1) In general.--Not later than 20 days after the service
of any civil investigative demand upon any person under
subsection (b), or at any time before the return date
specified in the demand, whichever period is shorter, or
within such period exceeding 20 days after service or in
excess of such return date as may be prescribed in writing,
subsequent to service, by any Bureau investigator named in
the demand, such person may file with the Bureau a petition
for an order by the Bureau modifying or setting aside the
demand.
(2) Compliance during pendency.--The time permitted for
compliance with the demand in whole or in part, as determined
proper and ordered by the Bureau, shall not run during the
pendency of a petition under paragraph (1) at the Bureau,
except that such person shall comply with any portions of the
demand not sought to be modified or set aside.
(3) Specific grounds.--A petition under paragraph (1) shall
specify each ground upon which the petitioner relies in
seeking relief, and may be based upon any failure of the
demand to comply with the provisions of this section, or upon
any constitutional or other legal right or privilege of such
person.
(g) Custodial Control.--At any time during which any
custodian is in custody or control of any documentary
material, tangible things, reports, answers to questions, or
transcripts of oral testimony given by any person in
compliance with any civil investigative demand, such person
may file, in the district court of the United States for the
judicial district within which the office of such custodian
is situated, and serve upon such custodian, a petition for an
order of such court requiring the performance by such
custodian of any duty imposed upon him by this section or
rule promulgated by the Bureau.
(h) Jurisdiction of Court.--
(1) In general.--Whenever any petition is filed in any
district court of the United States under this section, such
court shall have jurisdiction to hear and determine the
matter so presented, and to enter such order or orders as may
be required to carry out the provisions of this section.
(2) Appeal.--Any final order entered as described in
paragraph (1) shall be subject to appeal pursuant to section
1291 of title 28, United States Code.

SEC. 1053. HEARINGS AND ADJUDICATION PROCEEDINGS.

(a) In General.--The Bureau is authorized to conduct
hearings and adjudication proceedings with respect to any
person in the manner prescribed by chapter 5 of title 5,
United States Code in order to ensure or enforce compliance
with--
(1) the provisions of this title, including any rules
prescribed by the Bureau under this title; and
(2) any other Federal law that the Bureau is authorized to
enforce, including an enumerated consumer law, and any
regulations or order prescribed thereunder, unless such
Federal law specifically limits the Bureau from conducting a
hearing or adjudication proceeding and only to the extent of
such limitation.
(b) Special Rules for Cease-and-desist Proceedings.--
(1) Orders authorized.--
(A) In general.--If, in the opinion of the Bureau, any
covered person or service provider is engaging or has engaged
in an activity that violates a law, rule, or any condition
imposed in writing on the person by the Bureau, the Bureau
may, subject to sections 1024, 1025, and 1026, issue and
serve upon the covered person or service provider a notice of
charges in respect thereof.
(B) Content of notice.--The notice under subparagraph (A)
shall contain a statement of the facts constituting the
alleged violation or violations, and shall fix a time and
place at which a hearing will be held to determine whether an
order to cease and desist should issue against the covered
person or service provider, such hearing to be held not
earlier than 30 days nor later than 60 days after the date of
service of such notice, unless an earlier or a later date is
set by the Bureau, at the request of any party so served.
(C) Consent.--Unless the party or parties served under
subparagraph (B) appear at the hearing personally or by a
duly authorized representative, such person shall be deemed
to have consented to the issuance of the cease-and-desist
order.
(D) Procedure.--In the event of consent under subparagraph
(C), or if, upon the record, made at any such hearing, the
Bureau finds that any violation specified in the notice of
charges has been established, the Bureau may issue and serve
upon the covered person or service provider an order to cease
and desist from the violation or practice. Such order may, by
provisions which may be mandatory or otherwise, require the
covered person or service provider to cease and desist from
the subject activity, and to take affirmative action to
correct the conditions resulting from any such violation.
(2) Effectiveness of order.--A cease-and-desist order shall
become effective at the expiration of 30 days after the date
of service of an order under paragraph (1) upon the covered
person or service provider concerned (except in the case of a
cease-and-desist order issued upon consent, which shall
become effective at the time specified therein), and shall
remain effective and enforceable as provided therein, except
to such extent as the order is stayed, modified, terminated,
or set aside by action of the Bureau or a reviewing court.
(3) Decision and appeal.--Any hearing provided for in this
subsection shall be held in the Federal judicial district or
in the territory in which the residence or principal office
or place of business of the person is located unless the
person consents to another place, and shall be conducted in
accordance with the provisions of chapter 5 of title 5 of the
United States Code. After such hearing, and within 90 days
after the Bureau has notified the parties that the case has
been submitted to the Bureau for final decision, the Bureau
shall render its decision (which shall include findings of
fact upon which its decision is predicated) and shall issue
and serve upon each party to the proceeding an order or
orders consistent with the provisions of this section.
Judicial review of any such order shall be exclusively as
provided in this subsection. Unless a petition for review is
timely filed in a court of appeals of the United States, as
provided in paragraph (4), and thereafter until the record in
the proceeding has been filed as provided in paragraph (4),
the Bureau may at any time, upon such notice and in such
manner as the Bureau shall determine proper, modify,
terminate, or set aside any such order. Upon filing of the
record as provided, the Bureau may modify, terminate, or set
aside any such order with permission of the court.
(4) Appeal to court of appeals.--Any party to any
proceeding under this subsection may obtain a review of any
order served pursuant to this subsection (other than an order
issued with the consent of the person concerned) by the
filing in the court of appeals of the United States for the
circuit in which the principal office of the covered person
is located, or in the United States Court of Appeals for the
District of Columbia Circuit, within 30 days after the date
of service of such order, a written petition praying that the
order of the Bureau be modified, terminated, or set aside. A
copy of such petition shall be forthwith transmitted by the
clerk of the court to the Bureau, and thereupon the Bureau
shall file in the court the record in the proceeding, as
provided in section 2112 of title 28 of the United States
Code. Upon the filing of such petition, such court shall have
jurisdiction, which upon the filing of the record shall
except as provided in the last sentence of paragraph (3) be
exclusive, to affirm, modify, terminate, or set aside, in
whole or in part, the order of the Bureau. Review of such
proceedings shall be had as provided in chapter 7 of title 5
of the United States Code. The judgment and decree of the
court shall be final, except that the same shall be subject
to review by the Supreme Court of the United States, upon
certiorari, as provided in section 1254 of title 28 of the
United States Code.
(5) No stay.--The commencement of proceedings for judicial
review under paragraph

[[Page S2952]]

(4) shall not, unless specifically ordered by the court,
operate as a stay of any order issued by the Bureau.
(c) Special Rules for Temporary Cease-and-desist
Proceedings.--
(1) In general.--Whenever the Bureau determines that the
violation specified in the notice of charges served upon a
person, including a service provider, pursuant to subsection
(b), or the continuation thereof, is likely to cause the
person to be insolvent or otherwise prejudice the interests
of consumers before the completion of the proceedings
conducted pursuant to subsection (b), the Bureau may issue a
temporary order requiring the person to cease and desist from
any such violation or practice and to take affirmative action
to prevent or remedy such insolvency or other condition
pending completion of such proceedings. Such order may
include any requirement authorized under this subtitle. Such
order shall become effective upon service upon the person
and, unless set aside, limited, or suspended by a court in
proceedings authorized by paragraph (2), shall remain
effective and enforceable pending the completion of the
administrative proceedings pursuant to such notice and until
such time as the Bureau shall dismiss the charges specified
in such notice, or if a cease-and-desist order is issued
against the person, until the effective date of such order.
(2) Appeal.--Not later than 10 days after the covered
person or service provider concerned has been served with a
temporary cease-and-desist order, the person may apply to the
United States district court for the judicial district in
which the residence or principal office or place of business
of the person is located, or the United States District Court
for the District of Columbia, for an injunction setting
aside, limiting, or suspending the enforcement, operation, or
effectiveness of such order pending the completion of the
administrative proceedings pursuant to the notice of charges
served upon the person under subsection (b), and such court
shall have jurisdiction to issue such injunction.
(3) Incomplete or inaccurate records.--
(A) Temporary order.--If a notice of charges served under
subsection (b) specifies, on the basis of particular facts
and circumstances, that the books and records of a covered
person or service provider are so incomplete or inaccurate
that the Bureau is unable to determine the financial
condition of that person or the details or purpose of any
transaction or transactions that may have a material effect
on the financial condition of that person, the Bureau may
issue a temporary order requiring--
(i) the cessation of any activity or practice which gave
rise, whether in whole or in part, to the incomplete or
inaccurate state of the books or records; or
(ii) affirmative action to restore such books or records to
a complete and accurate state, until the completion of the
proceedings under subsection (b)(1).
(B) Effective period.--Any temporary order issued under
subparagraph (A)--
(i) shall become effective upon service; and
(ii) unless set aside, limited, or suspended by a court in
proceedings under paragraph (2), shall remain in effect and
enforceable until the earlier of--

(I) the completion of the proceeding initiated under
subsection (b) in connection with the notice of charges; or
(II) the date the Bureau determines, by examination or
otherwise, that the books and records of the covered person
or service provider are accurate and reflect the financial
condition thereof.

(d) Special Rules for Enforcement of Orders.--
(1) In general.--The Bureau may in its discretion apply to
the United States district court within the jurisdiction of
which the principal office or place of business of the person
is located, for the enforcement of any effective and
outstanding notice or order issued under this section, and
such court shall have jurisdiction and power to order and
require compliance herewith.
(2) Exception.--Except as otherwise provided in this
subsection, no court shall have jurisdiction to affect by
injunction or otherwise the issuance or enforcement of any
notice or order or to review, modify, suspend, terminate, or
set aside any such notice or order.
(e) Rules.--The Bureau shall prescribe rules establishing
such procedures as may be necessary to carry out this
section.

SEC. 1054. LITIGATION AUTHORITY.

(a) In General.--If any person violates a Federal consumer
financial law, the Bureau may, subject to sections 1024,
1025, and 1026, commence a civil action against such person
to impose a civil penalty or to seek all appropriate legal
and equitable relief including a permanent or temporary
injunction as permitted by law.
(b) Representation.--The Bureau may act in its own name and
through its own attorneys in enforcing any provision of this
title, rules thereunder, or any other law or regulation, or
in any action, suit, or proceeding to which the Bureau is a
party.
(c) Compromise of Actions.--The Bureau may compromise or
settle any action if such compromise is approved by the
court.
(d) Notice to the Attorney General.--When commencing a
civil action under Federal consumer financial law, or any
rule thereunder, the Bureau shall notify the Attorney General
and, with respect to a civil action against an insured
depository institution or insured credit union, the
appropriate prudential regulator.
(e) Appearance Before the Supreme Court.--The Bureau may
represent itself in its own name before the Supreme Court of
the United States, provided that the Bureau makes a written
request to the Attorney General within the 10-day period
which begins on the date of entry of the judgment which would
permit any party to file a petition for writ of certiorari,
and the Attorney General concurs with such request or fails
to take action within 60 days of the request of the Bureau.
(f) Forum.--Any civil action brought under this title may
be brought in a United States district court or in any court
of competent jurisdiction of a state in a district in which
the defendant is located or resides or is doing business, and
such court shall have jurisdiction to enjoin such person and
to require compliance with any Federal consumer financial
law.
(g) Time for Bringing Action.--
(1) In general.--Except as otherwise permitted by law or
equity, no action may be brought under this title more than 3
years after the date of discovery of the violation to which
an action relates.
(2) Limitations under other federal laws.--
(A) In general.--For purposes of this subsection, an action
arising under this title does not include claims arising
solely under enumerated consumer laws.
(B) Bureau authority.--In any action arising solely under
an enumerated consumer law, the Bureau may commence, defend,
or intervene in the action in accordance with the
requirements of that provision of law, as applicable.
(C) Transferred authority.--In any action arising solely
under laws for which authorities were transferred under
subtitles F and H, the Bureau may commence, defend, or
intervene in the action in accordance with the requirements
of that provision of law, as applicable.

SEC. 1055. RELIEF AVAILABLE.

(a) Administrative Proceedings or Court Actions.--
(1) Jurisdiction.--The court (or the Bureau, as the case
may be) in an action or adjudication proceeding brought under
Federal consumer financial law, shall have jurisdiction to
grant any appropriate legal or equitable relief with respect
to a violation of Federal consumer financial law, including a
violation of a rule or order prescribed under a Federal
consumer financial law.
(2) Relief.--Relief under this section may include, without
limitation--
(A) rescission or reformation of contracts;
(B) refund of moneys or return of real property;
(C) restitution;
(D) disgorgement or compensation for unjust enrichment;
(E) payment of damages or other monetary relief;
(F) public notification regarding the violation, including
the costs of notification;
(G) limits on the activities or functions of the person;
and
(H) civil money penalties, as set forth more fully in
subsection (c).
(3) No exemplary or punitive damages.--Nothing in this
subsection shall be construed as authorizing the imposition
of exemplary or punitive damages.
(b) Recovery of Costs.--In any action brought by the
Bureau, a State attorney general, or any State regulator to
enforce any Federal consumer financial law, the Bureau, the
State attorney general, or the State regulator may recover
its costs in connection with prosecuting such action if the
Bureau, the State attorney general, or the State regulator is
the prevailing party in the action.
(c) Civil Money Penalty in Court and Administrative
Actions.--
(1) In general.--Any person that violates, through any act
or omission, any provision of Federal consumer financial law
shall forfeit and pay a civil penalty pursuant to this
subsection.
(2) Penalty amounts.--
(A) First tier.--For any violation of a law, rule, or final
order or condition imposed in writing by the Bureau, a civil
penalty may not exceed $5,000 for each day during which such
violation or failure to pay continues.
(B) Second tier.--Notwithstanding paragraph (A), for any
person that recklessly engages in a violation of a Federal
consumer financial law, a civil penalty may not exceed
$25,000 for each day during which such violation continues.
(C) Third tier.--Notwithstanding subparagraphs (A) and (B),
for any person that knowingly violates a Federal consumer
financial law, a civil penalty may not exceed $1,000,000 for
each day during which such violation continues.
(3) Mitigating factors.--In determining the amount of any
penalty assessed under paragraph (2), the Bureau or the court
shall take into account the appropriateness of the penalty
with respect to--
(A) the size of financial resources and good faith of the
person charged;
(B) the gravity of the violation or failure to pay;
(C) the severity of the risks to or losses of the consumer,
which may take into account the number of products or
services sold or provided;
(D) the history of previous violations; and
(E) such other matters as justice may require.

[[Page S2953]]

(4) Authority to modify or remit penalty.--The Bureau may
compromise, modify, or remit any penalty which may be
assessed or had already been assessed under paragraph (2).
The amount of such penalty, when finally determined, shall be
exclusive of any sums owed by the person to the United States
in connection with the costs of the proceeding, and may be
deducted from any sums owing by the United States to the
person charged.
(5) Notice and hearing.--No civil penalty may be assessed
under this subsection with respect to a violation of any
Federal consumer financial law, unless--
(A) the Bureau gives notice and an opportunity for a
hearing to the person accused of the violation; or
(B) the appropriate court has ordered such assessment and
entered judgment in favor of the Bureau.

SEC. 1056. REFERRALS FOR CRIMINAL PROCEEDINGS.

If the Bureau obtains evidence that any person, domestic or
foreign, has engaged in conduct that may constitute a
violation of Federal criminal law, the Bureau shall have the
power to transmit such evidence to the Attorney General of
the United States, who may institute criminal proceedings
under appropriate law. Nothing in this section affects any
other authority of the Bureau to disclose information.

SEC. 1057. EMPLOYEE PROTECTION.

(a) In General.--No covered person or service provider
shall terminate or in any other way discriminate against, or
cause to be terminated or discriminated against, any covered
employee or any authorized representative of covered
employees by reason of the fact that such employee or
representative, whether at the initiative of the employee or
in the ordinary course of the duties of the employee (or any
person acting pursuant to a request of the employee), has--
(1) provided, caused to be provided, or is about to provide
or cause to be provided, information to the employer, the
Bureau, or any other State, local, or Federal, government
authority or law enforcement agency relating to any violation
of, or any act or omission that the employee reasonably
believes to be a violation of, any provision of this title or
any other provision of law that is subject to the
jurisdiction of the Bureau, or any rule, order, standard, or
prohibition prescribed by the Bureau;
(2) testified or will testify in any proceeding resulting
from the administration or enforcement of any provision of
this title or any other provision of law that is subject to
the jurisdiction of the Bureau, or any rule, order, standard,
or prohibition prescribed by the Bureau;
(3) filed, instituted, or caused to be filed or instituted
any proceeding under any Federal consumer financial law; or
(4) objected to, or refused to participate in, any
activity, policy, practice, or assigned task that the
employee (or other such person) reasonably believed to be in
violation of any law, rule, order, standard, or prohibition,
subject to the jurisdiction of, or enforceable by, the
Bureau.
(b) Definition of Covered Employee.--For the purposes of
this section, the term ``covered employee'' means any
individual performing tasks related to the offering or
provision of a consumer financial product or service.
(c) Procedures and Timetables.--
(1) Complaint.--
(A) In general.--A person who believes that he or she has
been discharged or otherwise discriminated against by any
person in violation of subsection (a) may, not later than 180
days after the date on which such alleged violation occurs,
file (or have any person file on his or her behalf) a
complaint with the Secretary of Labor alleging such discharge
or discrimination and identifying the person responsible for
such act.
(B) Actions of secretary of labor.--Upon receipt of such a
complaint, the Secretary of Labor shall notify, in writing,
the person named in the complaint who is alleged to have
committed the violation, of --
(i) the filing of the complaint;
(ii) the allegations contained in the complaint;
(iii) the substance of evidence supporting the complaint;
and
(iv) opportunities that will be afforded to such person
under paragraph (2).
(2) Investigation by secretary of labor.--
(A) In general.--Not later than 60 days after the date of
receipt of a complaint filed under paragraph (1), and after
affording the complainant and the person named in the
complaint who is alleged to have committed the violation that
is the basis for the complaint an opportunity to submit to
the Secretary of Labor a written response to the complaint
and an opportunity to meet with a representative of the
Secretary of Labor to present statements from witnesses, the
Secretary of Labor shall--
(i) initiate an investigation and determine whether there
is reasonable cause to believe that the complaint has merit;
and
(ii) notify the complainant and the person alleged to have
committed the violation of subsection (a), in writing, of
such determination.
(B) Notice of relief available.--If the Secretary of Labor
concludes that there is reasonable cause to believe that a
violation of subsection (a) has occurred, the Secretary of
Labor shall, together with the notice under subparagraph
(A)(ii), issue a preliminary order providing the relief
prescribed by paragraph (4)(B).
(C) Request for hearing.--Not later than 30 days after the
date of receipt of notification of a determination of the
Secretary of Labor under this paragraph, either the person
alleged to have committed the violation or the complainant
may file objections to the findings or preliminary order, or
both, and request a hearing on the record. The filing of such
objections shall not operate to stay any reinstatement remedy
contained in the preliminary order. Any such hearing shall be
conducted expeditiously, and if a hearing is not requested in
such 30-day period, the preliminary order shall be deemed a
final order that is not subject to judicial review.
(3) Grounds for determination of complaints.--
(A) In general.--The Secretary of Labor shall dismiss a
complaint filed under this subsection, and shall not conduct
an investigation otherwise required under paragraph (2),
unless the complainant makes a prima facie showing that any
behavior described in paragraphs (1) through (4) of
subsection (a) was a contributing factor in the unfavorable
personnel action alleged in the complaint.
(B) Rebuttal evidence.--Notwithstanding a finding by the
Secretary of Labor that the complainant has made the showing
required under subparagraph (A), no investigation otherwise
required under paragraph (2) shall be conducted, if the
employer demonstrates, by clear and convincing evidence, that
the employer would have taken the same unfavorable personnel
action in the absence of that behavior.
(C) Evidentiary standards.--The Secretary of Labor may
determine that a violation of subsection (a) has occurred
only if the complainant demonstrates that any behavior
described in paragraphs (1) through (4) of subsection (a) was
a contributing factor in the unfavorable personnel action
alleged in the complaint. Relief may not be ordered under
subparagraph (A) if the employer demonstrates by clear and
convincing evidence that the employer would have taken the
same unfavorable personnel action in the absence of that
behavior.
(4) Issuance of final orders; review procedures.--
(A) Timing.--Not later than 120 days after the date of
conclusion of any hearing under paragraph (2), the Secretary
of Labor shall issue a final order providing the relief
prescribed by this paragraph or denying the complaint. At any
time before issuance of a final order, a proceeding under
this subsection may be terminated on the basis of a
settlement agreement entered into by the Secretary of Labor,
the complainant, and the person alleged to have committed the
violation.
(B) Penalties.--
(i) Order of secretary of labor.--If, in response to a
complaint filed under paragraph (1), the Secretary of Labor
determines that a violation of subsection (a) has occurred,
the Secretary of Labor shall order the person who committed
such violation--

(I) to take affirmative action to abate the violation;
(II) to reinstate the complainant to his or her former
position, together with compensation (including back pay) and
restore the terms, conditions, and privileges associated with
his or her employment; and
(III) to provide compensatory damages to the complainant.

(ii) Penalty.--If an order is issued under clause (i), the
Secretary of Labor, at the request of the complainant, shall
assess against the person against whom the order is issued, a
sum equal to the aggregate amount of all costs and expenses
(including attorney fees and expert witness fees) reasonably
incurred, as determined by the Secretary of Labor, by the
complainant for, or in connection with, the bringing of the
complaint upon which the order was issued.
(C) Penalty for frivolous claims.--If the Secretary of
Labor finds that a complaint under paragraph (1) is frivolous
or has been brought in bad faith, the Secretary of Labor may
award to the prevailing employer a reasonable attorney fee,
not exceeding $1,000, to be paid by the complainant.
(D) De novo review.--
(i) Failure of the secretary to act.--If the Secretary of
Labor has not issued a final order within 210 days after the
date of filing of a complaint under this subsection, or
within 90 days after the date of receipt of a written
determination, the complainant may bring an action at law or
equity for de novo review in the appropriate district court
of the United States having jurisdiction, which shall have
jurisdiction over such an action without regard to the amount
in controversy, and which action shall, at the request of
either party to such action, be tried by the court with a
jury.
(ii) Procedures.--A proceeding under clause (i) shall be
governed by the same legal burdens of proof specified in
paragraph (3). The court shall have jurisdiction to grant all
relief necessary to make the employee whole, including
injunctive relief and compensatory damages, including--

(I) reinstatement with the same seniority status that the
employee would have had, but for the discharge or
discrimination;
(II) the amount of back pay, with interest; and
(III) compensation for any special damages sustained as a
result of the discharge or discrimination, including
litigation costs, expert witness fees, and reasonable
attorney fees.

[[Page S2954]]

(E) Other appeals.--Unless the complainant brings an action
under subparagraph (D), any person adversely affected or
aggrieved by a final order issued under subparagraph (A) may
file a petition for review of the order in the United States
Court of Appeals for the circuit in which the violation with
respect to which the order was issued, allegedly occurred or
the circuit in which the complainant resided on the date of
such violation, not later than 60 days after the date of the
issuance of the final order of the Secretary of Labor under
subparagraph (A). Review shall conform to chapter 7 of title
5, United States Code. The commencement of proceedings under
this subparagraph shall not, unless ordered by the court,
operate as a stay of the order. An order of the Secretary of
Labor with respect to which review could have been obtained
under this subparagraph shall not be subject to judicial
review in any criminal or other civil proceeding.
(5) Failure to comply with order.--
(A) Actions by the secretary.--If any person has failed to
comply with a final order issued under paragraph (4), the
Secretary of Labor may file a civil action in the United
States district court for the district in which the violation
was found to have occurred, or in the United States district
court for the District of Columbia, to enforce such order. In
actions brought under this paragraph, the district courts
shall have jurisdiction to grant all appropriate relief
including injunctive relief and compensatory damages.
(B) Civil actions to compel compliance.--A person on whose
behalf an order was issued under paragraph (4) may commence a
civil action against the person to whom such order was issued
to require compliance with such order. The appropriate United
States district court shall have jurisdiction, without regard
to the amount in controversy or the citizenship of the
parties, to enforce such order.
(C) Award of costs authorized.--The court, in issuing any
final order under this paragraph, may award costs of
litigation (including reasonable attorney and expert witness
fees) to any party, whenever the court determines such award
is appropriate.
(D) Mandamus proceedings.--Any nondiscretionary duty
imposed by this section shall be enforceable in a mandamus
proceeding brought under section 1361 of title 28, United
States Code.
(d) Unenforceability of Certain Agreements.--
(1) No waiver of rights and remedies.--Except as provided
under paragraph (3), and notwithstanding any other provision
of law, the rights and remedies provided for in this section
may not be waived by any agreement, policy, form, or
condition of employment, including by any predispute
arbitration agreement.
(2) No predispute arbitration agreements.--Except as
provided under paragraph (3), and notwithstanding any other
provision of law, no predispute arbitration agreement shall
be valid or enforceable to the extent that it requires
arbitration of a dispute arising under this section.
(3) Exception.--Notwithstanding paragraphs (1) and (2), an
arbitration provision in a collective bargaining agreement
shall be enforceable as to disputes arising under subsection
(a)(4), unless the Bureau determines, by rule, that such
provision is inconsistent with the purposes of this title.

SEC. 1058. EFFECTIVE DATE.

This subtitle shall become effective on the designated
transfer date.

Subtitle F--Transfer of Functions and Personnel; Transitional
Provisions

SEC. 1061. TRANSFER OF CONSUMER FINANCIAL PROTECTION
FUNCTIONS.

(a) Defined Terms.--For purposes of this subtitle--
(1) the term ``consumer financial protection functions''
means research, rulemaking, issuance of orders or guidance,
supervision, examination, and enforcement activities, powers,
and duties relating to the offering or provision of consumer
financial products or services; and
(2) the terms ``transferor agency'' and ``transferor
agencies'' mean, respectively--
(A) the Board of Governors (and any Federal reserve bank,
as the context requires), the Federal Deposit Insurance
Corporation, the Federal Trade Commission, the National
Credit Union Administration, the Office of the Comptroller of
the Currency, the Office of Thrift Supervision, and the
Department of Housing and Urban Development, and the heads of
those agencies; and
(B) the agencies listed in subparagraph (A), collectively.
(b) In General.--Except as provided in subsection (c),
consumer financial protection functions are transferred as
follows:
(1) Board of governors.--
(A) Transfer of functions.--All consumer financial
protection functions of the Board of Governors are
transferred to the Bureau.
(B) Board of governors authority.--The Bureau shall have
all powers and duties that were vested in the Board of
Governors, relating to consumer financial protection
functions, on the day before the designated transfer date.
(2) Comptroller of the currency.--
(A) Transfer of functions.--All consumer financial
protection functions of the Comptroller of the Currency are
transferred to the Bureau.
(B) Comptroller authority.--The Bureau shall have all
powers and duties that were vested in the Comptroller of the
Currency, relating to consumer financial protection
functions, on the day before the designated transfer date.
(3) Director of the office of thrift supervision.--
(A) Transfer of functions.--All consumer financial
protection functions of the Director of the Office of Thrift
Supervision are transferred to the Bureau.
(B) Director authority.--The Bureau shall have all powers
and duties that were vested in the Director of the Office of
Thrift Supervision, relating to consumer financial protection
functions, on the day before the designated transfer date.
(4) Federal deposit insurance corporation.--
(A) Transfer of functions.--All consumer financial
protection functions of the Federal Deposit Insurance
Corporation are transferred to the Bureau.
(B) Corporation authority.--The Bureau shall have all
powers and duties that were vested in the Federal Deposit
Insurance Corporation, relating to consumer financial
protection functions, on the day before the designated
transfer date.
(5) Federal trade commission.--
(A) Transfer of functions.--Except as provided in
subparagraph (C), all consumer financial protection functions
of the Federal Trade Commission are transferred to the
Bureau.
(B) Commission authority.--Except as provided in
subparagraph (C), the Bureau shall have all powers and duties
that were vested in the Federal Trade Commission relating to
consumer financial protection functions on the day before the
designated transfer date.
(C) Continuation of certain commission authorities.--
Notwithstanding subparagraphs (A) and (B), the Federal Trade
Commission shall continue to have authority to enforce, and
issue rules with respect to--
(i) the Credit Repair Organizations Act (15 U.S.C. 1679 et
seq.);
(ii) section 5 of the Federal Trade Commission Act (15
U.S.C. 45); and
(iii) the Telemarketing and Consumer Fraud and Abuse
Prevention Act (15 U.S.C. 6101 et seq.).
(6) National credit union administration.--
(A) Transfer of functions.--All consumer financial
protection functions of the National Credit Union
Administration are transferred to the Bureau.
(B) National credit union administration authority.--The
Bureau shall have all powers and duties that were vested in
the National Credit Union Administration, relating to
consumer financial protection functions, on the day before
the designated transfer date.
(7) Department of housing and urban development.--
(A) Transfer of functions.--All consumer protection
functions of the Secretary of the Department of Housing and
Urban Development relating to the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2601 et seq.) and the
Secure and Fair Enforcement for Mortgage Licensing Act of
2008 (12 U.S.C. 5102 et seq.) are transferred to the Bureau.
(B) Authority of the department of housing and urban
development.--The Bureau shall have all powers and duties
that were vested in the Secretary of the Department of
Housing and Urban Development relating to the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.),
and the Secure and Fair Enforcement for Mortgage Licensing
Act of 2008 (12 U.S.C. 5101 et seq.), on the day before the
designated transfer date.
(c) Transfers of Functions Subject to Examination and
Enforcement Authority Remaining With Transferor Agencies.--
The transfers of functions in subsection (b) do not affect
the authority of the agencies identified in subsection (b)
from conducting examinations or initiating and maintaining
enforcement proceedings, including performing appropriate
supervisory and support functions relating thereto, in
accordance with sections 1024, 1025, and 1026.
(d) Effective Date.--Subsections (b) and (c) shall become
effective on the designated transfer date.

SEC. 1062. DESIGNATED TRANSFER DATE.

(a) In General.--Not later than 60 days after the date of
enactment of this Act, the Secretary shall--
(1) in consultation with the Chairman of the Board of
Governors, the Chairperson of the Corporation, the Chairman
of the Federal Trade Commission, the Chairman of the National
Credit Union Administration Board, the Comptroller of the
Currency, the Director of the Office of Thrift Supervision,
the Secretary of the Department of Housing and Urban
Development, and the Director of the Office of Management and
Budget, designate a single calendar date for the transfer of
functions to the Bureau under section 1061; and
(2) publish notice of that designated date in the Federal
Register.
(b) Changing Designation.--The Secretary--
(1) may, in consultation with the Chairman of the Board of
Governors, the Chairperson of the Federal Deposit Insurance
Corporation, the Chairman of the Federal Trade Commission,
the Chairman of the National Credit Union Administration
Board, the Comptroller of the Currency, the Director of the
Office of Thrift Supervision, the Secretary of the Department
of Housing and

[[Page S2955]]

Urban Development, and the Director of the Office of
Management and Budget, change the date designated under
subsection (a); and
(2) shall publish notice of any changed designated date in
the Federal Register.
(c) Permissible Dates.--
(1) In general.--Except as provided in paragraph (2), any
date designated under this section shall be not earlier than
180 days, nor later than 18 months, after the date of
enactment of this Act.
(2) Extension of time.--The Secretary may designate a date
that is later than 18 months after the date of enactment of
this Act if the Secretary transmits to appropriate committees
of Congress--
(A) a written determination that orderly implementation of
this title is not feasible before the date that is 18 months
after the date of enactment of this Act;
(B) an explanation of why an extension is necessary for the
orderly implementation of this title; and
(C) a description of the steps that will be taken to effect
an orderly and timely implementation of this title within the
extended time period.
(3) Extension limited.--In no case may any date designated
under this section be later than 24 months after the date of
enactment of this Act.

SEC. 1063. SAVINGS PROVISIONS.

(a) Board of Governors.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(1) does not affect the validity of
any right, duty, or obligation of the United States, the
Board of Governors (or any Federal reserve bank), or any
other person that--
(A) arises under any provision of law relating to any
consumer financial protection function of the Board of
Governors transferred to the Bureau by this title; and
(B) existed on the day before the designated transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the Board of
Governors (or any Federal reserve bank) before the designated
transfer date with respect to any consumer financial
protection function of the Board of Governors (or any Federal
reserve bank) transferred to the Bureau by this title, except
that the Bureau, subject to sections 1024, 1025, and 1026,
shall be substituted for the Board of Governors (or Federal
reserve bank) as a party to any such proceeding as of the
designated transfer date.
(b) Federal Deposit Insurance Corporation.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(4) does not affect the validity of
any right, duty, or obligation of the United States, the
Federal Deposit Insurance Corporation, the Board of Directors
of that Corporation, or any other person, that--
(A) arises under any provision of law relating to any
consumer financial protection function of the Federal Deposit
Insurance Corporation transferred to the Bureau by this
title; and
(B) existed on the day before the designated transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the Federal
Deposit Insurance Corporation (or the Board of Directors of
that Corporation) before the designated transfer date with
respect to any consumer financial protection function of the
Federal Deposit Insurance Corporation transferred to the
Bureau by this title, except that the Bureau, subject to
sections 1024, 1025, and 1026, shall be substituted for the
Federal Deposit Insurance Corporation (or Board of Directors)
as a party to any such proceeding as of the designated
transfer date.
(c) Federal Trade Commission.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(5) does not affect the validity of
any right, duty, or obligation of the United States, the
Federal Trade Commission, or any other person, that--
(A) arises under any provision of law relating to any
consumer financial protection function of the Federal Trade
Commission transferred to the Bureau by this title; and
(B) existed on the day before the designated transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the Federal
Trade Commission before the designated transfer date with
respect to any consumer financial protection function of the
Federal Trade Commission transferred to the Bureau by this
title, except that the Bureau, subject to sections 1024,
1025, and 1026, shall be substituted for the Federal Trade
Commission as a party to any such proceeding as of the
designated transfer date.
(d) National Credit Union Administration.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(6) does not affect the validity of
any right, duty, or obligation of the United States, the
National Credit Union Administration, the National Credit
Union Administration Board, or any other person, that--
(A) arises under any provision of law relating to any
consumer financial protection function of the National Credit
Union Administration transferred to the Bureau by this title;
and
(B) existed on the day before the designated transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the National
Credit Union Administration (or the National Credit Union
Administration Board) before the designated transfer date
with respect to any consumer financial protection function of
the National Credit Union Administration transferred to the
Bureau by this title, except that the Bureau, subject to
sections 1024, 1025, and 1026, shall be substituted for the
National Credit Union Administration (or National Credit
Union Administration Board) as a party to any such proceeding
as of the designated transfer date.
(e) Office of the Comptroller of the Currency.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(2) does not affect the validity of
any right, duty, or obligation of the United States, the
Comptroller of the Currency, the Office of the Comptroller of
the Currency, or any other person, that--
(A) arises under any provision of law relating to any
consumer financial protection function of the Comptroller of
the Currency transferred to the Bureau by this title; and
(B) existed on the day before the designated transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the Comptroller
of the Currency (or the Office of the Comptroller of the
Currency) with respect to any consumer financial protection
function of the Comptroller of the Currency transferred to
the Bureau by this title before the designated transfer date,
except that the Bureau, subject to sections 1024, 1025, and
1026, shall be substituted for the Comptroller of the
Currency (or the Office of the Comptroller of the Currency)
as a party to any such proceeding as of the designated
transfer date.
(f) Office of Thrift Supervision.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(3) does 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--
(A) arises under any provision of law relating to any
consumer financial protection function of the Director of the
Office of Thrift Supervision transferred to the Bureau by
this title; and
(B) that existed on the day before the designated transfer
date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the Director of
the Office of Thrift Supervision (or the Office of Thrift
Supervision) with respect to any consumer financial
protection function of the Director of the Office of Thrift
Supervision transferred to the Bureau by this title before
the designated transfer date, except that the Bureau, subject
to sections 1024, 1025, and 1026, shall be substituted for
the Director (or the Office of Thrift Supervision) as a party
to any such proceeding as of the designated transfer date.
(g) Department of Housing and Urban Development.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(7) shall not affect the validity
of any right, duty, or obligation of the United States, the
Secretary of the Department of Housing and Urban Development
(or the Department of Housing and Urban Development), or any
other person, that--
(A) arises under any provision of law relating to any
function of the Secretary of the Department of Housing and
Urban Development with respect to the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2601 et seq.) or the Secure
and Fair Enforcement for Mortgage Licensing Act of 2008 (12
U.S.C. 5102 et seq.) transferred to the Bureau by this title;
and
(B) existed on the day before the designated transfer date.
(2) Continuation of suits.--This title shall not abate any
proceeding commenced by or against the Secretary of the
Department of Housing and Urban Development (or the
Department of Housing and Urban Development) with respect to
any consumer financial protection function of the Secretary
of the Department of Housing and Urban Development
transferred to the Bureau by this title before the designated
transfer date, except that the Bureau, subject to sections
1024, 1025, and 1026, shall be substituted for the Secretary
of the Department of Housing and Urban Development (or the
Department of Housing and Urban Development) as a party to
any such proceeding as of the designated transfer date.
(h) Continuation of Existing Orders, Rules, Determinations,
Agreements, and Resolutions.--All orders, resolutions,
determinations, agreements, and rules that have been issued,
made, prescribed, or allowed to become effective by any
transferor agency or by a court of competent jurisdiction, in
the performance of consumer financial protection functions
that are transferred by this title and that are in effect on
the day before the designated transfer date, shall continue
in effect according to the terms of those orders,
resolutions, determinations, agreements, and rules, and shall
not be enforceable by or against the Bureau.
(i) Identification of Rules Continued.--Not later than the
designated transfer date, the Bureau--
(1) shall, after consultation with the head of each
transferor agency, identify the rules continued under
subsection (h) that will be enforced by the Bureau; and

[[Page S2956]]

(2) shall publish a list of such rules in the Federal
Register.
(j) Status of Rules Proposed or Not Yet Effective.--
(1) Proposed rules.--Any proposed rule of a transferor
agency which that agency, in performing consumer financial
protection functions transferred by this title, has proposed
before the designated transfer date, but has not been
published as a final rule before that date, shall be deemed
to be a proposed rule of the Bureau.
(2) Rules not yet effective.--Any interim or final rule of
a transferor agency which that agency, in performing consumer
financial protection functions transferred by this title, has
published before the designated transfer date, but which has
not become effective before that date, shall become effective
as a rule of the Bureau according to its terms.

SEC. 1064. TRANSFER OF CERTAIN PERSONNEL.

(a) In General.--
(1) Certain federal reserve system employees transferred.--
(A) Identifying employees for transfer.--The Bureau and the
Board of Governors shall--
(i) jointly determine the number of employees of the Board
of Governors necessary to perform or support the consumer
financial protection functions of the Board of Governors that
are transferred to the Bureau by this title; and
(ii) consistent with the number determined under clause
(i), jointly identify employees of the Board of Governors for
transfer to the Bureau, in a manner that the Bureau and the
Board of Governors, in their sole discretion, determine
equitable.
(B) Identified employees transferred.--All employees of the
Board of Governors identified under subparagraph (A)(ii)
shall be transferred to the Bureau for employment.
(C) Federal reserve bank employees.--Employees of any
Federal reserve bank who, on the day before the designated
transfer date, are performing consumer financial protection
functions on behalf of the Board of Governors shall be
treated as employees of the Board of Governors for purposes
of subparagraphs (A) and (B).
(2) Certain fdic employees transferred.--
(A) Identifying employees for transfer.--The Bureau and the
Board of Directors of the Federal Deposit Insurance
Corporation shall--
(i) jointly determine the number of employees of that
Corporation necessary to perform or support the consumer
financial protection functions of the Corporation that are
transferred to the Bureau by this title; and
(ii) consistent with the number determined under clause
(i), jointly identify employees of the Corporation for
transfer to the Bureau, in a manner that the Bureau and the
Board of Directors of the Corporation, in their sole
discretion, determine equitable.
(B) Identified employees transferred.--All employees of the
Corporation identified under subparagraph (A)(ii) shall be
transferred to the Bureau for employment.
(3) Certain ncua employees transferred.--
(A) Identifying employees for transfer.--The Bureau and the
National Credit Union Administration Board shall--
(i) jointly determine the number of employees of the
National Credit Union Administration necessary to perform or
support the consumer financial protection functions of the
National Credit Union Administration that are transferred to
the Bureau by this title; and
(ii) consistent with the number determined under clause
(i), jointly identify employees of the National Credit Union
Administration for transfer to the Bureau, in a manner that
the Bureau and the National Credit Union Administration
Board, in their sole discretion, determine equitable.
(B) Identified employees transferred.--All employees of the
National Credit Union Administration identified under
subparagraph (A)(ii) shall be transferred to the Bureau for
employment.
(4) Certain office of the comptroller of the currency
employees transferred.--
(A) Identifying employees for transfer.--The Bureau and the
Comptroller of the Currency shall--
(i) jointly determine the number of employees of the Office
of the Comptroller of the Currency necessary to perform or
support the consumer financial protection functions of the
Office of the Comptroller of the Currency that are
transferred to the Bureau by this title; and
(ii) consistent with the number determined under clause
(i), jointly identify employees of the Office of the
Comptroller of the Currency for transfer to the Bureau, in a
manner that the Bureau and the Office of the Comptroller of
the Currency, in their sole discretion, determine equitable.
(B) Identified employees transferred.--All employees of the
Office of the Comptroller of the Currency identified under
subparagraph (A)(ii) shall be transferred to the Bureau for
employment.
(5) Certain office of thrift supervision employees
transferred.--
(A) Identifying employees for transfer.--The Bureau and the
Director of the Office of Thrift Supervision shall--
(i) jointly determine the number of employees of the Office
of Thrift Supervision necessary to perform or support the
consumer financial protection functions of the Office of
Thrift Supervision that are transferred to the Bureau by this
title; and
(ii) consistent with the number determined under clause
(i), jointly identify employees of the Office of Thrift
Supervision for transfer to the Bureau, in a manner that the
Bureau and the Office of Thrift Supervision, in their sole
discretion, determine equitable.
(B) Identified employees transferred.--All employees of the
Office of Thrift Supervision identified under subparagraph
(A)(ii) shall be transferred to the Bureau for employment.
(6) Certain employees of department of housing and urban
development transferred.--
(A) Identifying employees for transfer.--The Bureau and the
Secretary of the Department of Housing and Urban Development
shall--
(i) jointly determine the number of employees of the
Department of Housing and Urban Development necessary to
perform or support the consumer protection functions of the
Department that are transferred to the Bureau by this title;
and
(ii) consistent with the number determined under clause
(i), jointly identify employees of the Department of Housing
and Urban Development for transfer to the Bureau in a manner
that the Bureau and the Secretary of the Department of
Housing and Urban Development, in their sole discretion, deem
equitable.
(B) Identified employees transferred.--All employees of the
Department of Housing and Urban Development identified under
subparagraph (A)(ii) shall be transferred to the Bureau for
employment.
(7) Appointment authority for excepted service and senior
executive service transferred.--
(A) In general.--In the case of an employee occupying a
position in the excepted service or the Senior Executive
Service, any appointment authority established pursuant to
law or regulations of the Office of Personnel Management for
filling such positions shall be transferred, subject to
subparagraph (B).
(B) Declining transfers allowed.--An agency or entity may
decline to make a transfer of authority under subparagraph
(A) (and the employees appointed pursuant thereto) 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, and non-career positions in the Senior Executive
Service (within the meaning of section 3132(a)(7) of title 5,
United States Code).
(b) Timing of Transfers and Position Assignments.--Each
employee to be transferred under this section shall--
(1) be transferred not later than 90 days after the
designated transfer date; and
(2) receive notice of a position assignment not later than
120 days after the effective date of his or her transfer.
(c) Transfer of Function.--
(1) In general.--Notwithstanding any other provision of
law, the transfer of employees shall be deemed a transfer of
functions for the purpose of section 3503 of title 5, United
States Code.
(2) Priority of this title.--If any provisions of this
title conflict with any protection provided to transferred
employees under section 3503 of title 5, United States Code,
the provisions of this title shall control.
(d) Equal Status and Tenure Positions.--
(1) Employees transferred from fdic, ftc, hud, ncua, occ,
and ots.--Each employee transferred from the Federal Deposit
Insurance Corporation, the Federal Trade Commission, the
National Credit Union Administration, the Office of the
Comptroller of the Currency, the Office of Thrift
Supervision, or the Department of Housing and Urban
Development shall be placed in a position at the Bureau with
the same status and tenure as that employee held on the day
before the designated transfer date.
(2) Employees transferred from the federal reserve
system.--
(A) Comparability.--Each employee transferred from the
Board of Governors or from a Federal reserve bank shall be
placed in a position with the same status and tenure as that
of an employee transferring to the Bureau from the Office of
the Comptroller of the Currency who perform similar functions
and have similar periods of service.
(B) Service periods credited.--For purposes of this
paragraph, periods of service with the Board of Governors or
a Federal reserve bank shall be credited as periods of
service with a Federal agency.
(e) Additional Certification Requirements Limited.--
Examiners transferred to the Bureau are not subject to any
additional certification requirements before being placed in
a comparable examiner position at the Bureau examining the
same types of institutions as they examined before they were
transferred.
(f) Personnel Actions Limited.--
(1) 2-year protection.--Except as provided in paragraph
(2), each transferred employee holding a permanent position
on the day before the designated transfer date may not,
during the 2-year period beginning on the designated transfer
date, be involuntarily separated, or involuntarily reassigned
outside his or her locality pay area, as defined by the
Office of Personnel Management.
(2) Exceptions.--Paragraph (1) does not limit the right of
the Bureau--
(A) to separate an employee for cause or for unacceptable
performance;
(B) to terminate an appointment to a position excepted from
the competitive service

[[Page S2957]]

because of its confidential policy-making, policy-
determining, or policy-advocating character; or
(C) to reassign a supervisory employee outside his or her
locality pay area, as defined by the Office of Personnel
Management, when the Bureau determines that the reassignment
is necessary for the efficient operation of the Bureau.
(g) Pay.--
(1) 2-year protection.--Except as provided in paragraph
(2), each transferred employee shall, during the 2-year
period beginning on the designated transfer date, receive pay
at a rate equal to not less than the basic rate of pay
(including any geographic differential) that the employee
received during the pay period immediately preceding the date
of transfer.
(2) Exceptions.--Paragraph (1) does not limit the right of
the Bureau to reduce the rate of basic pay of a transferred
employee--
(A) for cause;
(B) for unacceptable performance; or
(C) with the consent of the employee.
(3) Protection only while employed.--Paragraph (1) applies
to a transferred employee only while that employee remains
employed by the Bureau.
(4) Pay increases permitted.--Paragraph (1) does not limit
the authority of the Bureau to increase the pay of a
transferred employee.
(h) Reorganization.--
(1) Between 1st and 3rd year.--
(A) In general.--If the Bureau determines, during the 2-
year period beginning 1 year after the designated transfer
date, that a reorganization of the staff of the Bureau is
required--
(i) that 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;
(ii) before the reorganization occurs, all employees in the
same locality pay area as defined by the Office of Personnel
Management shall be placed in a uniform position
classification system; and
(iii) any resulting reduction in force shall be governed by
the provisions of chapter 35 of title 5, United States Code,
except that the Bureau shall--

(I) establish competitive areas (as that term is defined in
regulations issued by the Office of Personnel Management) to
include at a minimum all employees in the same locality pay
area as defined by the Office of Personnel Management;
(II) establish competitive levels (as that term is defined
in regulations issued by the Office of Personnel Management)
without regard to whether the particular employees have been
appointed to positions in the competitive service or the
excepted service; and
(III) afford employees appointed to positions in the
excepted service (other than to a position excepted from the
competitive service because of its confidential policy-
making, policy-determining, or policy-advocating character)
the same assignment rights to positions within the Bureau as
employees appointed to positions in the competitive service.

(B) Service credit for reductions in force.--For purposes
of this paragraph, periods of service with a Federal home
loan bank, a joint office of the Federal home loan banks, the
Board of Governors, a Federal reserve bank, the Federal
Deposit Insurance Corporation, or the National Credit Union
Administration shall be credited as periods of service with a
Federal agency.
(2) After 3rd year.--
(A) In general.--If the Bureau determines, at any time
after the 3-year period beginning on the designated transfer
date, that a reorganization of the staff of the Bureau is
required, any resulting reduction in force shall be governed
by the provisions of chapter 35 of title 5, United States
Code, except that the Bureau shall establish competitive
levels (as that term is defined in regulations issued by the
Office of Personnel Management) without regard to types of
appointment held by particular employees transferred under
this section.
(B) Service credit for reductions in force.--For purposes
of this paragraph, periods of service with a Federal home
loan bank, a joint office of the Federal home loan banks, the
Board of Governors, a Federal reserve bank, the Federal
Deposit Insurance Corporation, or the National Credit Union
Administration shall be credited as periods of service with a
Federal agency.
(i) Benefits.--
(1) Retirement benefits for transferred employees.--
(A) In general.--
(i) Continuation of existing retirement plan.--Except as
provided in subparagraph (B), each transferred employee shall
remain enrolled in his or her existing retirement plan,
through any period of continuous employment with the Bureau.
(ii) Employer contribution.--The Bureau shall pay any
employer contributions to the existing retirement plan of
each transferred employee, as required under that 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
his or her transfer to the Bureau may, during the 1-year
period beginning 6 months after the designated 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
designated transfer date.
(C) Bureau participation in federal reserve system
retirement plan.--
(i) Separate account in federal reserve system retirement
plan established.--Notwithstanding any other provision of
law, and subject to the terms and conditions of this section,
a separate account in the Federal Reserve System retirement
plan shall be established for Bureau employees 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 Bureau shall
deposit into the account established under clause (i) the
employer contributions that the Bureau makes on behalf of
employees who do not make the election under subparagraph
(B).
(iv) Account administration.--The Bureau shall administer
the account established under clause (i) as a participating
employer in the Federal Reserve System retirement plan.
(D) Definitions.--For purposes of this paragraph--
(i) the term ``existing retirement plan'' means, with
respect to any employee transferred under this section, the
particular retirement plan (including the Financial
Institutions Retirement Fund) and any associated thrift
savings plan of the agency or Federal reserve bank from which
the employee was transferred, in which the employee was
enrolled on the day before the designated transfer date; and
(ii) the term ``Federal employee retirement program'' means
the retirement program for Federal employees established by
chapter 84 of title 5, United States Code.
(2) Benefits other than retirement benefits for transferred
employees.--
(A) During 1st year.--
(i) Existing plans continue.--Each transferred employee
may, for 1 year after the designated transfer date, retain
membership in any other employee benefit program of the
agency or bank from which the employee transferred, including
a dental, vision, long term care, or life insurance program,
to which the employee belonged on the day before the
designated transfer date.
(ii) Employer contribution.--The Bureau shall reimburse the
agency or bank from which an employee was transferred for any
cost incurred by that agency or bank in continuing to extend
coverage in the benefit program to the employee, as required
under that program or negotiated agreements.
(B) Dental, vision, or life insurance after 1st year.--If,
after the 1-year period beginning on the designated transfer
date, the Bureau decides not to continue participation in any
dental, vision, or life insurance program of an agency or
bank from which an employee transferred, a transferred
employee who is a member of such a program may, before the
decision of the Bureau takes effect, elect to enroll, without
regard to any regularly scheduled open season, in--
(i) the enhanced dental benefits established by chapter 89A
of title 5, United States Code;
(ii) the enhanced vision benefits established by chapter
89B of title 5, United States Code; or
(iii) the Federal Employees Group Life Insurance Program
established by 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 designated transfer date, the
Bureau decides not to continue participation in any long term
care insurance program of an agency or bank from which an
employee transferred, a transferred employee who is a member
of such a program may, before the decision of the Bureau
takes effect, elect to apply for coverage under the Federal
Long Term Care Insurance Program established by chapter 90 of
title 5, United States Code, under the underwriting
requirements applicable to a new active workforce member (as
defined in part 875, title 5, Code of Federal Regulations).
(D) Employee contribution.--An individual enrolled in the
Federal Employees Health Benefits program shall pay any
employee contribution required by the plan.
(E) Additional funding.--The Bureau shall transfer to the
Federal 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 Bureau and the Office
of Management and Budget, to be necessary to reimburse the
Fund for the cost to the Fund of providing benefits under
this paragraph.
(F) Credit for time enrolled in other plans.--For employees
transferred under this title, enrollment in a health benefits
plan administered by a transferor agency or a Federal reserve
bank, as the case may be, immediately before enrollment in a
health benefits plan under chapter 89 of title 5, United
States Code, shall be considered as enrollment in a health
benefits plan under

[[Page S2958]]

that chapter for purposes of section 8905(b)(1)(A) of title
5, United States Code.
(G) Special provisions to ensure continuation of life
insurance benefits.--
(i) In general.--An annuitant (as defined in section
8901(3) of title 5, United States Code) who is enrolled in a
life insurance plan administered by a transferor agency on
the day before the designated transfer date shall be eligible
for coverage by a life insurance plan under sections 8706(b),
8714a, 8714b, and 8714c of title 5, United States Code, or in
a life insurance plan established by the Bureau, without
regard to any regularly scheduled open season and requirement
of insurability.
(ii) Employee contribution.--An individual enrolled in a
life insurance plan under this subparagraph shall pay any
employee contribution required by the plan.
(iii) Additional funding.--The Bureau shall transfer to the
Employees' 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 Bureau and the Office of Management and
Budget, to be necessary to reimburse the Fund for the cost to
the Fund of providing benefits under this subparagraph not
otherwise paid for by the employee under clause (ii).
(iv) Credit for time enrolled in other plans.--For
employees transferred under this title, enrollment in a life
insurance plan administered by a transferor agency
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.
(3) OPM rules.--The Office of Personnel Management shall
issue such rules as are necessary to carry out this
subsection.
(j) Implementation of Uniform Pay and Classification
System.--Not later than 2 years after the designated transfer
date, the Bureau shall implement a uniform pay and
classification system for all employees transferred under
this title.
(k) Equitable Treatment.--In administering the provisions
of this section, the Bureau--
(1) shall take no action that would unfairly disadvantage
transferred employees relative to each other based on their
prior employment by the Board of Governors, the Federal
Deposit Insurance Corporation, the Federal Trade Commission,
the National Credit Union Administration, the Office of the
Comptroller of the Currency, the Office of Thrift
Supervision, a Federal reserve bank, a Federal home loan
bank, or a joint office of the Federal home loan banks; and
(2) may take such action as is appropriate in individual
cases so that employees transferred under this section
receive 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 of those employees, for prior
periods of service with any Federal agency, including the
Board of Governors, the Corporation, the Federal Trade
Commission, the National Credit Union Administration, the
Office of the Comptroller of the Currency, the Office of
Thrift Supervision, a Federal reserve bank, a Federal home
loan bank, or a joint office of the Federal home loan banks.
(l) Implementation.--In implementing the provisions of this
section, the Bureau shall coordinate with the Office of
Personnel Management and other entities having expertise in
matters related to employment to ensure a fair and orderly
transition for affected employees.

SEC. 1065. INCIDENTAL TRANSFERS.

(a) Incidental Transfers Authorized.--The Director of the
Office of Management and Budget, in consultation with the
Secretary, shall make such additional incidental transfers
and dispositions of assets and liabilities held, used,
arising from, available, or to be made available, in
connection with the functions transferred by this title, as
the Director may determine necessary to accomplish the
purposes of this title.
(b) Sunset.--The authority provided in this section shall
terminate 5 years after the date of enactment of this Act.

SEC. 1066. INTERIM AUTHORITY OF THE SECRETARY.

(a) In General.--The Secretary is authorized to perform the
functions of the Bureau under this subtitle until the
Director of the Bureau is confirmed by the Senate in
accordance with section 1011.
(b) Interim Administrative Services by the Department of
the Treasury.--The Department of the Treasury may provide
administrative services necessary to support the Bureau
before the designated transfer date.

SEC. 1067. TRANSITION OVERSIGHT.

(a) Purpose.--The purpose of this section is to ensure that
the Bureau--
(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 Bureau 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 Bureau
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 flexibilities plan.--The Bureau 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 Bureau 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.

Subtitle G--Regulatory Improvements

SEC. 1071. COLLECTION OF DEPOSIT ACCOUNT DATA.

(a) Purpose.--The purpose of this section is to promote
awareness and understanding of the access of individuals and
communities to financial services, and to identify business
and community development needs and opportunities.
(b) In General.--
(1) Records required.--For each branch, automated teller
machine at which deposits are accepted, and other deposit
taking service facility with respect to any financial
institution, the financial institution shall maintain a
record of the number and dollar amounts of the deposit
accounts of customers.
(2) Geo-coded addresses of depositors.--Customer addresses
shall be geo-coded for the collection of data regarding the
census tracts of the residences or business locations of
customers.
(3) Identification of depositor type.--In maintaining
records on any deposit account under this section, the
financial institution shall record whether the deposit
account is for a residential or commercial customer.
(4) Public availability.--
(A) In general.--Each financial institution shall make
publicly available on an annual basis, from information
collected under this section--
(i) the address and census tract of each branch, automated
teller machine at which deposits are accepted, and other
deposit taking service facility with respect to the financial
institution;
(ii) the type of deposit account, including whether the
account was a checking or savings account; and
(iii) data on the number and dollar amount of the accounts,
presented by census tract location of the residential and
commercial customer.
(B) Protection of identity.--In making data publicly
available, any personally identifiable data element shall be
removed so as to protect the identities of the commercial and
residential customers.
(c) Availability of Information.--
(1) Submission to agencies.--The data required to be
compiled and maintained under this section by any financial
institution shall be submitted annually to the Bureau, or to
a Federal banking agency, in accordance with rules prescribed
by the Bureau.
(2) Availability of information.--Information compiled and
maintained under this section shall be retained for not less
than 3 years after the date of preparation and shall be made
available to the public, upon request, in the form required
under rules prescribed by the Bureau.
(d) Bureau Use.--The Bureau--
(1) shall use the data on branches and deposit accounts
acquired under this section as part of the examination of a
covered person as part of an examination under this title;
(2) shall assess the distribution of residential and
commercial accounts at such financial institution across
income and minority level of census tracts; and

[[Page S2959]]

(3) may use the data for any other purpose as permitted by
law.
(e) Rules and Guidance.--The Bureau shall prescribe such
rules and issue guidance as may be necessary to carry out,
enforce, and compile data pursuant to this section. The
Bureau shall prescribe rules regarding the provision of data
compiled under this section to the Federal banking agencies
to carry out the purposes of this section, and shall issue
guidance to financial institutions regarding measures to
facilitate compliance with this section and the requirements
of rules prescribed thereunder.
(f) Definitions.--For purposes of this section, the
following definitions shall apply:
(1) Deposit account.--The term ``deposit account'' includes
any checking account, savings account, credit union share
account, and other types of accounts, as defined by the
Bureau.
(2) Financial institution.--The term ``financial
institution''--
(A) has the meaning given to the term ``insured depository
institution'' in section 3(c)(2) of the Federal Deposit
Insurance Act; and
(B) includes any credit union.
(g) Effective Date.--This section shall become effective on
the designated transfer date.

SEC. 1072. SMALL BUSINESS DATA COLLECTION.

(a) In General.--The Equal Credit Opportunity Act (15
U.S.C. 1691 et seq.) is amended by inserting after section
704A the following:

``SEC. 740B. SMALL BUSINESS LOAN DATA COLLECTION.

``(a) Purpose.--The purpose of this section is to
facilitate enforcement of fair lending laws and enable
communities, governmental entities, and creditors to identify
business and community development needs and opportunities of
women-owned and minority-owned small businesses.
``(b) Information Gathering.--Subject to the requirements
of this section, in the case of any application to a
financial institution for credit for a small business, the
financial institution shall--
``(1) inquire whether the small business is a women- or
minority-owned small business, without regard to whether such
application is received in person, by mail, by telephone, by
electronic mail or other form of electronic transmission, or
by any other means, and whether or not such application is in
response to a solicitation by the financial institution; and
``(2) maintain a record of the responses to such inquiry,
separate from the application and accompanying information.
``(c) Right To Refuse.--Any applicant for credit may refuse
to provide any information requested pursuant to subsection
(b) in connection with any application for credit.
``(d) No Access by Underwriters.--
``(1) Limitation.--Where feasible, no loan underwriter or
other officer or employee of a financial institution, or any
affiliate of a financial institution, involved in making any
determination concerning an application for credit shall have
access to any information provided by the applicant pursuant
to a request under subsection (b) in connection with such
application.
``(2) Limited access.--If a financial institution
determines that a loan underwriter or other officer or
employee of a financial institution, or any affiliate of a
financial institution, involved in making any determination
concerning an application for credit should have access to
any information provided by the applicant pursuant to a
request under subsection (b), the financial institution shall
provide notice to the applicant of the access of the
underwriter to such information, along with notice that the
financial institution may not discriminate on the basis of
such information.
``(e) Form and Manner of Information.--
``(1) In general.--Each financial institution shall compile
and maintain, in accordance with regulations of the Bureau, a
record of the information provided by any loan applicant
pursuant to a request under subsection (b).
``(2) Itemization.--Information compiled and maintained
under paragraph (1) shall be itemized in order to clearly and
conspicuously disclose--
``(A) the number of the application and the date on which
the application was received;
``(B) the type and purpose of the loan or other credit
being applied for;
``(C) the amount of the credit or credit limit applied for,
and the amount of the credit transaction or the credit limit
approved for such applicant;
``(D) the type of action taken with respect to such
application, and the date of such action;
``(E) the census tract in which is located the principal
place of business of the small business loan applicant;
``(F) the gross annual revenue of the business in the last
fiscal year of the small business loan applicant preceding
the date of the application;
``(G) the race and ethnicity of the principal owners of the
business; and
``(H) any additional data that the Bureau determines would
aid in fulfilling the purposes of this section.
``(3) No personally identifiable information.--In compiling
and maintaining any record of information under this section,
a financial institution may not include in such record the
name, specific address (other than the census tract required
under paragraph (1)(E)), telephone number, electronic mail
address, or any other personally identifiable information
concerning any individual who is, or is connected with, the
small business loan applicant.
``(4) Discretion to delete or modify publicly available
data.--The Bureau may, at its discretion, delete or modify
data collected under this section which is or will be
available to the public, if the Bureau determines that the
deletion or modification of the data would advance a
compelling privacy interest.
``(f) Availability of Information.--
``(1) Submission to bureau.--The data required to be
compiled and maintained under this section by any financial
institution shall be submitted annually to the Bureau.
``(2) Availability of information.--Information compiled
and maintained under this section shall be--
``(A) retained for not less than 3 years after the date of
preparation;
``(B) made available to any member of the public, upon
request, in the form required under regulations prescribed by
the Bureau;
``(C) annually made available to the public generally by
the Bureau, in such form and in such manner as is determined
appropriate by the Bureau.
``(3) Compilation of aggregate data.--The Bureau may, at
its discretion--
``(A) compile and aggregate data collected under this
section for its own use; and
``(B) make public such compilations of aggregate data.
``(g) Bureau Action.--
``(1) In general.--The Bureau shall prescribe such rules
and issue such guidance as may be necessary to carry out,
enforce, and compile data pursuant to this section.
``(2) Exceptions.--The Bureau, by rule or order, may adopt
exceptions to any requirement of this section and may,
conditionally or unconditionally, exempt any financial
institution or class of financial institutions from the
requirements of this section, as the Bureau deems necessary
or appropriate to carry out the purposes of this section.
``(3) Guidance.--The Bureau shall issue guidance designed
to facilitate compliance with the requirements of this
section, including assisting financial institutions in
working with applicants to determine whether the applicants
are women- or minority-owned for purposes of this section.
``(h) Definitions.--For purposes of this section, the
following definitions shall apply:
``(1) Financial institution.--The term `financial
institution' means any partnership, company, corporation,
association (incorporated or unincorporated), trust, estate,
cooperative organization, or other entity that engages in any
financial activity.
``(2) Minority.--The term `minority' has the same meaning
as in section 1204(c)(3) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989.
``(3) Minority-owned small business.--The term `minority-
owned small business' means a small business--
``(A) more than 50 percent of the ownership or control of
which is held by 1 or more minority individuals; and
``(B) more than 50 percent of the net profit or loss of
which accrues to 1 or more minority individuals.
``(4) Small business loan.--The term `small business loan'
shall be defined by the Bureau, which may take into account--
``(A) the gross revenues of the borrower;
``(B) the total number of employees of the borrower;
``(C) the industry in which the borrower has its primary
operations; and
``(D) the size of the loan.
``(5) Women-owned small business.--The term `women-owned
small business' means a business--
``(A) more than 50 percent of the ownership or control of
which is held by 1 or more women; and
``(B) more than 50 percent of the net profit or loss of
which accrues to 1 or more women.''.
(b) Technical and Conforming Amendments.--Section 701(b) of
the Equal Credit Opportunity Act (15 U.S.C. 1691(b)) is
amended--
(1) in paragraph (3), by striking ``or'' at the end;
(2) in paragraph (4), by striking the period at the end and
inserting ``; or''; and
(3) by inserting after paragraph (4), the following:
``(5) to make an inquiry under section 704B, in accordance
with the requirements of that section.''.
(c) Clerical Amendment.--The table of sections for title
VII of the Consumer Credit Protection Act is amended by
inserting after the item relating to section 704A the
following new item:

``704B. Small business loan data collection.''.
(d) Effective Date.--This section shall become effective on
the designated transfer date.

SEC. 1073. GAO STUDY ON THE EFFECTIVENESS AND IMPACT OF
VARIOUS APPRAISAL METHODS.

(a) In General.--The Government Accountability Office shall
conduct a study on the effectiveness and impact of various
appraisal methods, including the cost approach, the
comparative sales approach, the income approach, and others
that may be available.
(b) Study.--Not later than--
(1) 1 year after the date of enactment of this Act, the
Government Accountability Office shall submit a study to the
Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House
of Representatives;

[[Page S2960]]

(2) 90 days after the date of enactment of this Act, the
Government Accountability Office shall provide a report on
the status of the study and any preliminary findings to the
Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House
of Representatives.
(c) Content of Study.--The study required by this section
shall include an examination of--
(1) the prevalence, alone or in combination, of these
approaches in purchase-money and refinance mortgage
transactions;
(2) the accuracy of the various approaches in assessing the
property as collateral;
(3) whether and how the approaches contributed to price
speculation in the previous cycle;
(4) the costs to consumers of these approaches;
(5) the disclosure of fees to consumers in the appraisal
process;
(6) to what extent such approaches may be influenced by a
conflict of interest between the mortgage lender and the
appraiser and the mechanism by which the lender selects and
compensates the appraiser; and
(7) the suitability of appraisal approaches in rural versus
urban areas.

SEC. 1074. PROHIBITION ON CERTAIN PREPAYMENT PENALTIES.

(a) In General.--Chapter 2 of the Truth in Lending Act (15
U.S.C. 1631 et seq.) is amended by inserting after section
129A (15 U.S.C. 1639a) the following new section:

``SEC. 129B. PROHIBITION ON CERTAIN PREPAYMENT PENALTIES.

``(a) Prohibited on Certain Loans.--A residential mortgage
loan that is not a qualified mortgage may not contain terms
under which a consumer is required to pay a prepayment
penalty for paying all or part of the principal after the
loan is consummated.
``(b) Phased-out Penalties on Qualified Mortgages.--
``(1) In general.--A qualified mortgage may not contain
terms under which a consumer is required to pay a prepayment
penalty for paying all or part of the principal after the
loan is consummated in excess of--
``(A) during the 1-year period beginning on the date on
which the loan is consummated, an amount equal to 3 percent
of the outstanding balance on the loan;
``(B) during the 1-year period beginning immediately after
the end of the period described in subparagraph (A), an
amount equal to 2 percent of the outstanding balance on the
loan; and
``(C) during the 1-year period beginning immediately after
the end of the 1-year period described in subparagraph (B),
an amount equal to 1 percent of the outstanding balance on
the loan.
``(2) Prohibition.--After the end of the 3-year period
beginning on the date on which the loan is consummated, no
prepayment penalty may be imposed on a qualified mortgage.
``(c) Option for No Prepayment Penalty Required.--A
creditor may not offer a consumer a residential mortgage loan
product that has a prepayment penalty for paying all or part
of the principal after the loan is consummated as a term of
the loan, without offering to the consumer a residential
mortgage loan product that does not have a prepayment penalty
as a term of the loan.
``(d) Prohibitions on Evasions, Structuring of
Transactions, and Reciprocal Arrangements.--A creditor may
not take any action in connection with a residential mortgage
loan--
``(1) to structure a loan transaction as an open end
consumer credit plan or another form of loan for the purpose
and with the intent of evading the provisions of this
section; or
``(2) to divide any loan transaction into separate parts
for the purpose and with the intent of evading provisions of
this section.
``(e) Publication of Average Prime Offer Rate and APR
Thresholds.--The Board--
``(1) shall publish, and update at least weekly, average
prime offer rates;
``(2) may publish multiple rates based on varying types of
mortgage transactions; and
``(3) shall adjust the thresholds of 1.50 percentage points
in subsection (g)(3)(A)(v)(I), 2.50 percentage points in
subsection (g)(3)(A)(v)(II), and 3.50 percentage points in
subsection (g)(3)(A)(v)(III), as necessary to reflect
significant changes in market conditions and to effectuate
the purposes of this section.
``(f) Regulations.--
``(1) In general.--The Bureau shall prescribe regulations
to carry out this section.
``(2) Revision of safe harbor criteria.--The Bureau may
prescribe regulations that revise, add to, or subtract from
the criteria that define a qualified mortgage, upon a finding
that such regulations are necessary or appropriate--
``(A) to ensure that responsible, affordable mortgage
credit remains available to consumers in a manner consistent
with the purposes of this section;
``(B) to effectuate the purposes of this section;
``(C) to prevent circumvention or evasion thereof; or
``(D) to facilitate compliance with this section.
``(3) Interagency harmonization.--
``(A) Determination of qualifying mortgage treatment.--The
agencies and officials described in subparagraph (B) shall,
in consultation with the Bureau, prescribe rules defining the
types of loans they insure, guarantee, or administer, as the
case may be, that are qualified mortgages for purposes of
this section, upon a finding that such rules are consistent
with the purposes of this section or are appropriate to
prevent circumvention or evasion thereof or to facilitate
compliance with this section.
``(B) Agencies and officials.--The agencies and officials
described in this subparagraph are--
``(i) the Secretary of the Department of Housing and Urban
Development, with regard to mortgages insured under title II
of the National Housing Act (12 U.S.C. 1707 et seq.);
``(ii) the Secretary of Veterans Affairs, with regard to a
loan made or guaranteed by the Secretary of Veterans Affairs;
``(iii) the Secretary of Agriculture, with regard to loans
guaranteed by the Secretary of Agriculture pursuant to
section 502 of the Housing Act of 1949 (42 U.S.C. 1472(h));
``(iv) the Federal Housing Finance Agency, with regard to
loans meeting the conforming loan standards of the Federal
National Mortgage Association or the Federal Home Loan
Mortgage Corporation; and
``(v) the Rural Housing Service, with regard to loans
insured by the Rural Housing Service.
``(4) Implementation.--Regulations required or authorized
to be prescribed under this subsection--
``(A) shall be prescribed in final form before the end of
the 12-month period beginning on the date of enactment of
this section; and
``(B) shall take effect not later than 18 months after the
date of enactment of this section.
``(g) Definitions.--For purposes of this section, the
following definitions shall apply:
``(1) Average prime offer rate.--The term `average prime
offer rate' means an annual percentage rate that is derived
from average interest rates, points, and other loan pricing
terms currently offered to consumers by a representative
sample of creditors for mortgage transactions that have low-
risk pricing characteristics.
``(2) Prepayment penalty.--The term `prepayment penalty'
means any penalty for paying all or part of the principal on
an extension of credit before the date on which the principal
is due, including a computation of a refund of unearned
interest by a method that is less favorable to the consumer
than the actuarial method, as defined in section 933(d) of
the Housing and Community Development Act of 1992 (15 U.S.C.
1615(d)).
``(3) Qualified mortgage.--The term `qualified mortgage'
means--
``(A) any residential mortgage loan--
``(i) that does not have an adjustable rate;
``(ii) that does not allow a consumer to defer repayment of
principal or interest, or is not otherwise deemed a `non-
traditional mortgage' under guidance, advisories, or
regulations prescribed by the Bureau;
``(iii) that does not provide for a repayment schedule that
results in negative amortization at any time;
``(iv) for which the terms are fully amortizing and which
does not result in a balloon payment, where a `balloon
payment' is a scheduled payment that is more than twice as
large as the average of earlier scheduled payments;
``(v) which has an annual percentage rate that does not
exceed the average prime offer rate for a comparable
transaction, as of the date on which the interest rate is
set--

``(I) by 1.5 or more percentage points, in the case of a
first lien residential mortgage loan having an original
principal obligation amount that is equal to or less than the
amount of the maximum limitation on the original principal
obligation of a mortgage in effect for a residence of the
applicable size, as of the date on which such interest rate
is set, pursuant to the sixth sentence of section 305(a)(2)
of the Federal Home Loan Mortgage Corporation Act (12 U.S.C.
1454(a)(2));
``(II) by 2.5 or more percentage points, in the case of a
first lien residential mortgage loan having an original
principal obligation amount that is more than the amount of
the maximum limitation on the original principal obligation
of a mortgage in effect for a residence of the applicable
size, as of the date on which such interest rate is set,
pursuant to the sixth sentence of section 305(a)(2) of the
Federal Home Loan Mortgage Corporation Act (12 U.S.C.
1454(a)(2)); or
``(III) by 3.5 or more percentage points, in the case of a
subordinate lien residential mortgage loan;

``(vi) for which the income and financial resources relied
upon to qualify the obligors on the loan are verified and
documented;
``(vii) for which the underwriting process is based on a
payment schedule that fully amortizes the loan over the loan
term and takes into account all applicable taxes, insurance,
and assessments;
``(viii) that does not cause the total monthly debts of the
consumer, including amounts under the loan, to exceed a
percentage established by regulation of the monthly gross
income of the consumer, or such other maximum percentage of
such income, as may be prescribed by regulation under
subsection (g), which rules shall take into consideration the
income of the consumer available to pay regular expenses
after payment of all installment and revolving debt;
``(ix) for which the total points and fees payable in
connection with the loan do not exceed 2 percent of the total
loan amount, where the term `points and fees' means points
and fees as defined by Section

[[Page S2961]]

103(aa)(4) of the Truth in Lending Act (15 U.S.C.
1602(aa)(4)); and
``(x) for which the term of the loan does not exceed 30
years, except as such term may be extended under subsection
(g); and
``(B) any reverse mortgage that is insured by the Federal
Housing Administration or complies with the condition
established in subparagraph (A)(v).
``(4) Residential mortgage loan.--The term `residential
mortgage loan' means any consumer credit transaction that is
secured by a mortgage, deed of trust, or other equivalent
consensual security interest on a dwelling or on residential
real property that includes a dwelling, other than a consumer
credit transaction under an open end credit plan or an
extension of credit relating to a plan described in section
101(53D) of title 11, United States Code.''.
(b) Conforming Amendments.--Section 129(c) of the Truth in
Lending Act (15 U.S.C. 1639(c)) is amended--
(1) by striking paragraph (2);
(2) by striking ``(1) In general.--''; and
(3) by redesignating subparagraphs (A) and (B) as
paragraphs (1) and (2), respectively.

SEC. 1075. ASSISTANCE FOR ECONOMICALLY VULNERABLE INDIVIDUALS
AND FAMILIES.

(a) HERA Amendments.--Section 1132 of the Housing and
Economic Recovery Act of 2008 (12 U.S.C. 1701x note) is
amended--
(1) in subsection (a), by inserting in each of paragraphs
(1), (2), (3), and (4) ``or economically vulnerable
individuals and families'' after ``homebuyers'' each place
that term appears;
(2) in subsection (b)(1), by inserting ``or economically
vulnerable individuals and families'' after ``homebuyers'';
(3) in subsection (c)(1)--
(A) in subparagraph (A), by striking ``or'' at the end;
(B) in subparagraph (B), by striking the period at the end
and inserting ``; or''; and
(C) by adding at the end the following:
``(C) a nonprofit corporation that--
``(i) is exempt from taxation under section 501(c)(3) of
the Internal Revenue Code of 1986; and
``(ii) specializes or has expertise in working with
economically vulnerable individuals and families, but whose
primary purpose is not provision of credit counseling
services.''; and
(4) in subsection (d)(1), by striking ``not more than 5''.
(b) Applicability.--Amendments made by subsection (a) shall
not apply to programs authorized by section 1132 of the
Housing and Economic Recovery Act of 2008 (12 U.S.C. 1701x
note) that are funded with appropriations prior to fiscal
year 2011.

SEC. 1076. REMITTANCE TRANSFERS.

(a) Treatment of Remittance Transfers.--The Electronic Fund
Transfer Act (15 U.S.C. 1693 et seq.) is amended--
(1) in section 902(b) (15 U.S.C. 1693(b)), by inserting
``and remittance'' after ``electronic fund'';
(2) by redesignating sections 919, 920, 921, and 922 as
sections 920, 921, 922, and 923, respectively; and
(3) by inserting after section 918 the following:

``SEC. 919. REMITTANCE TRANSFERS.

``(a) Disclosures Required for Remittance Transfers.--
``(1) In general.--Each remittance transfer provider shall
make disclosures as required under this section and in
accordance with rules prescribed by the Board.
``(2) Storefront disclosures.--
``(A) In general.--At every physical storefront location
owned or controlled by a remittance transfer provider (with
respect to remittance transfer activities), the remittance
transfer provider shall prominently post, and update daily, a
notice describing a model transfer for the amounts of $100
and $200 (in United States dollars) showing the amount of
currency that will be received by the designated recipient,
using the values of the currency into which the funds will be
exchanged for the 3 currencies to which that particular
storefront sends the greatest number of remittance transfer
payments, measured irrespective of the value of such
payments. The values shall include all fees charged by the
remittance transfer provider, taken out of the $100 and $200
amounts.
``(B) Electronic disclosure.--Subject to the rules
prescribed by the Board, a remittance transfer provider shall
prominently post, and update daily, a notice describing a
model transfer, as described in subparagraph (A), on the
Internet site owned or controlled by the remittance transfer
provider which senders use to electronically conduct
remittance transfer transactions.
``(3) Specific disclosures.--In addition to any other
disclosures applicable under this title, and subject to
paragraph (4), a remittance transfer provider shall provide,
in writing and in a form that the sender may keep, to each
sender requesting a remittance transfer, as applicable to the
transaction--
``(A) at the time at which the sender requests a remittance
transfer to be initiated, and prior to the sender making any
payment in connection with the remittance transfer, a
disclosure describing the amount of currency that will be
sent to the designated recipient, using the values of the
currency into which the funds will be exchanged; and
``(B) at the time at which the sender makes payment in
connection with the remittance transfer--
``(i) a receipt showing--

``(I) the information described in subparagraph (A);
``(II) the promised date of delivery to the designated
recipient; and
``(III) the name and either the telephone number or the
address of the designated recipient; and

``(ii) a statement containing--

``(I) information about the rights of the sender under this
section regarding the resolution of errors; and
``(II) appropriate contact information for--

``(aa) the remittance transfer provider; and
``(bb) each State or Federal agency supervising the
remittance transfer provider, including its State licensing
authority or Federal regulator, as applicable.
``(4) Requirements relating to disclosures.--With respect
to each disclosure required to be provided under paragraph
(3), and subject to paragraph (5), a remittance transfer
provider shall--
``(A) provide an initial notice and receipt, as required by
subparagraphs (A) and (B) of paragraph (3), and an error
resolution statement, as required by subsection (c), that
clearly and conspicuously describe the information required
to be disclosed therein; and
``(B) with respect to any transaction that a sender
conducts electronically, comply with the Electronic
Signatures in Global and National Commerce Act (15 U.S.C.
7001 et seq.).
``(5) Exemption authority.--The Board may, by rule, permit
a remittance transfer provider to satisfy the requirements
of--
``(A) paragraph (3)(A) orally, if the transaction is
conducted entirely by telephone;
``(B) paragraph (3)(B), by mailing the documents required
under such subparagraph to the sender, not later than 1
business day after the date on which the transaction is
conducted, if the transaction is conducted entirely by
telephone;
``(C) subparagraphs (A) and (B) of paragraph (3) together
in one written disclosure, but only to the extent that the
information provided in accordance with paragraph (3)(A) is
accurate at the time at which payment is made in connection
with the subject remittance transfer;
``(D) paragraph (3)(A), if a sender initiates a transaction
to one of those countries displayed, in the exact amount of
the transfers displayed pursuant to paragraph (2), if the
Board finds it to be appropriate; and
``(E) paragraph (3)(A), without compliance with section
101(c) of the Electronic Signatures in Global Commerce Act,
if a sender initiates the transaction electronically and the
information is displayed electronically in a manner that the
sender can keep.
``(b) Foreign Language Disclosures.--
``(1) In general.--The disclosures required under this
section shall be made in English and in each of the same
foreign languages principally used by the remittance transfer
provider, or any of its agents, to advertise, solicit, or
market, either orally or in writing, at that office.
``(2) Accounts.--In the case of a sender who holds a demand
deposit, savings deposit, or other asset account with the
remittance transfer provider (other than an occasional or
incidental credit balance under an open end credit plan, as
defined in section 103(i) of the Truth in Lending Act), the
disclosures required under this section shall be made in the
language or languages principally used by the remittance
transfer provider to communicate to the sender with respect
to the account.
``(c) Remittance Transfer Errors.--
``(1) Error resolution.--
``(A) In general.--If a remittance transfer provider
receives oral or written notice from the sender within 180
days of the promised date of delivery that an error occurred
with respect to a remittance transfer, including the amount
of currency designated in subsection (a)(3)(A) that was to be
sent to the designated recipient of the remittance transfer,
using the values of the currency into which the funds should
have been exchanged, but was not made available to the
designated recipient in the foreign country, the remittance
transfer provider shall resolve the error pursuant to this
subsection and investigate the reason for the error.
``(B) Remedies.--Not later than 90 days after the date of
receipt of a notice from the sender pursuant to subparagraph
(A), the remittance transfer provider shall, as applicable to
the error and as designated by the sender--
``(i) refund to the sender the total amount of funds
tendered by the sender in connection with the remittance
transfer which was not properly transmitted;
``(ii) make available to the designated recipient, without
additional cost to the designated recipient or to the sender,
the amount appropriate to resolve the error;
``(iii) provide such other remedy, as determined
appropriate by rule of the Board for the protection of
senders; or
``(iv) provide written notice to the sender that there was
no error with an explanation responding to the specific
complaint of the sender.
``(2) Rules.--The Board shall establish, by rule issued not
later than 1 calendar year after the date of enactment of the
Restoring American Financial Stability Act of 2010, clear and
appropriate standards for remittance transfer providers with
respect to error resolution relating to remittance transfers,
to protect senders from such errors. Standards prescribed
under this paragraph shall include appropriate standards
regarding record keeping, as required, including
documentation--
``(A) of the complaint of the sender;

[[Page S2962]]

``(B) that the sender provides the remittance transfer
provider with respect to the alleged error; and
``(C) of the findings of the remittance transfer provider
regarding the investigation of the alleged error that the
sender brought to their attention.
``(d) Applicability of This Title.--
``(1) In general.--A remittance transfer that is not an
electronic fund transfer, as defined in section 903, shall
not be subject to any of the provisions of sections 905
through 913. A remittance transfer that is an electronic fund
transfer, as defined in section 903, shall be subject to all
provisions of this title, except for section 908, that are
otherwise applicable to electronic fund transfers under this
title.
``(2) Rule of construction.--Nothing in this section shall
be construed--
``(A) to affect the application to any transaction, to any
remittance provider, or to any other person of any of the
provisions of subchapter II of chapter 53 of title 31, United
States Code, section 21 of the Federal Deposit Insurance Act
(12 U.S.C. 1829b), or chapter 2 of title I of Public Law 91-
508 (12 U.S.C. 1951-1959), or any regulations promulgated
thereunder; or
``(B) to cause any fund transfer that would not otherwise
be treated as such under paragraph (1) to be treated as an
electronic fund transfer, or as otherwise subject to this
title, for the purposes of any of the provisions referred to
in subparagraph (A) or any regulations promulgated
thereunder.
``(e) Acts of Agents.--A remittance transfer provider shall
be liable for any violation of this section by any agent,
authorized delegate, or person affiliated with such provider,
when such agent, authorized delegate, or affiliate acts for
that remittance transfer provider.
``(f) Definitions.--As used in this section--
``(1) the term `designated recipient' means any person
located in a foreign country and identified by the sender as
the authorized recipient of a remittance transfer to be made
by a remittance transfer provider, except that a designated
recipient shall not be deemed to be a consumer for purposes
of this Act;
``(2) the term `remittance transfer' means the electronic
(as defined in section 106(2) of the Electronic Signatures in
Global and National Commerce Act (15 U.S.C. 7006(2)))
transfer of funds requested by a sender located in any State
to a designated recipient that is initiated by a remittance
transfer provider, whether or not the sender holds an account
with the remittance transfer provider or whether or not the
remittance transfer is also an electronic fund transfer, as
defined in section 903;
``(3) the term `remittance transfer provider' means any
person or financial institution that provides remittance
transfers for a consumer in the normal course of its
business, whether or not the consumer holds an account with
such person or financial institution; and
``(4) the term `sender' means a consumer who requests a
remittance provider to send a remittance transfer for the
consumer to a designated recipient.''.
(b) Automated Clearinghouse System.--
(1) Expansion of system.--The Board of Governors shall work
with the Federal reserve banks to expand the use of the
automated clearinghouse system for remittance transfers to
foreign countries, with a focus on countries that receive
significant remittance transfers from the United States,
based on--
(A) the number, volume, and size of such transfers;
(B) the significance of the volume of such transfers
relative to the external financial flows of the receiving
country, including--
(i) the total amount transferred; and
(ii) the total volume of payments made by United States
Government agencies to beneficiaries and retirees living
abroad;
(C) the feasibility of such an expansion; and
(D) the ability of the Federal Reserve System to establish
payment gateways in different geographic regions and currency
zones to receive remittance transfers and route them through
the payments systems in the destination countries.
(2) Report to congress.--Not later than one calendar year
after the date of enactment of this Act, and on April 30
biennially thereafter during the 10-year period beginning on
that date of enactment, the Board of Governors 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 status of the
automated clearinghouse system and its progress in complying
with the requirements of this subsection. The report shall
include an analysis of adoption rates of International ACH
Transactions rules and formats, the efficacy of increasing
adoption rates, and potential recommendations to increase
adoption.
(c) Expansion of Financial Institution Provision of
Remittance Transfers.--
(1) Provision of guidelines to institutions.--Each of the
Federal banking agencies and the National Credit Union
Administration shall provide guidelines to financial
institutions under the jurisdiction of the agency regarding
the offering of low-cost remittance transfers and no-cost or
low-cost basic consumer accounts, as well as agency services
to remittance transfer providers.
(2) Assistance to financial literacy commission.--As part
of its duties as members of the Financial Literacy and
Education Commission, the Bureau, the Federal banking
agencies, and the National Credit Union Administration shall
assist the Financial Literacy and Education Commission in
executing the Strategy for Assuring Financial Empowerment (or
the ``SAFE Strategy''), as it relates to remittances.
(d) Federal Credit Union Act Conforming Amendment.--
Paragraph (12) of section 107 of the Federal Credit Union Act
(12 U.S.C. 1757) is amended to read as follows:
``(12) in accordance with regulations prescribed by the
Board--
``(A) to sell, to persons in the field of membership,
negotiable checks (including travelers checks), money orders,
and other similar money transfer instruments (including
international and domestic electronic fund transfers);
``(B) to provide remittance transfers, as defined in
section 919 of the Electronic Fund Transfer Act, to persons
in the field of membership; and
``(C) to cash checks and money orders for persons in the
field of membership for a fee;''.

Subtitle H--Conforming Amendments

SEC. 1081. AMENDMENTS TO THE INSPECTOR GENERAL ACT.

Effective on the date of enactment of this Act, the
Inspector General Act of 1978 (5 U.S.C. App. 3) is amended--
(1) in section 8G(a)(2), by inserting ``and the Bureau of
Consumer Financial Protection'' after ``Board of Governors of
the Federal Reserve System'';
(2) in section 8G(c), by adding at the end the following:
``For purposes of implementing this section, the Chairman of
the Board of Governors of the Federal Reserve System shall
appoint the Inspector General of the Board of Governors of
the Federal Reserve System and the Bureau of Consumer
Financial Protection. The Inspector General of the Board of
Governors of the Federal Reserve System and the Bureau of
Consumer Financial Protection shall have all of the
authorities and responsibilities provided by this Act with
respect to the Bureau of Consumer Financial Protection, as if
the Bureau were part of the Board of Governors of the Federal
Reserve System.''; and
(3) in section 8G(g)(3), by inserting ``and the Bureau of
Consumer Financial Protection'' after ``Board of Governors of
the Federal Reserve System'' the first place that term
appears.

SEC. 1082. AMENDMENTS TO THE PRIVACY ACT OF 1974.

Effective on the date of enactment of this Act, section
552a of title 5, United States Code, is amended by adding at
the end the following:
``(w) Applicability to Bureau of Consumer Financial
Protection.--Except as provided in the Consumer Financial
Protection Act of 2010, this section shall apply with respect
to the Bureau of Consumer Financial Protection.''.

SEC. 1083. AMENDMENTS TO THE ALTERNATIVE MORTGAGE TRANSACTION
PARITY ACT OF 1982.

(a) In General.--The Alternative Mortgage Transaction
Parity Act of 1982 (12 U.S.C. 3801 et seq.) is amended--
(1) in section 803 (12 U.S.C. 3802(1)), by striking
``1974'' and all that follows through ``described and
defined'' and inserting the following: ``1974), in which the
interest rate or finance charge may be adjusted or
renegotiated, described and defined''; and
(2) in section 804 (12 U.S.C. 3803)--
(A) in subsection (a)--
(i) in each of paragraphs (1), (2), and (3), by inserting
after ``transactions made'' each place that term appears ``on
or before the designated transfer date, as determined under
section 1062 of the Consumer Financial Protection Act of
2010,'';
(ii) in paragraph (2), by striking ``and'' at the end;
(iii) in paragraph (3), by striking the period at the end
and inserting ``; and''; and
(iv) by adding at the end the following new paragraph:
``(4) with respect to transactions made after the
designated transfer date, only in accordance with regulations
governing alternative mortgage transactions, as issued by the
Bureau of Consumer Financial Protection for federally
chartered housing creditors, in accordance with the
rulemaking authority granted to the Bureau of Consumer
Financial Protection with regard to federally chartered
housing creditors under provisions of law other than this
section.'';
(B) by striking subsection (c) and inserting the following:
``(c) Preemption of State Law.--An alternative mortgage
transaction may be made by a housing creditor in accordance
with this section, notwithstanding any State constitution,
law, or regulation that prohibits an alternative mortgage
transaction. For purposes of this subsection, a State
constitution, law, or regulation that prohibits an
alternative mortgage transaction does not include any State
constitution, law, or regulation that regulates mortgage
transactions generally, including any restriction on
prepayment penalties or late charges.''; and
(C) by adding at the end the following:
``(d) Bureau Actions.--The Bureau of Consumer Financial
Protection shall--
``(1) review the regulations identified by the Comptroller
of the Currency and the National Credit Union Administration,
(as those rules exist on the designated transfer date), as
applicable under paragraphs (1) through (3) of subsection
(a);

[[Page S2963]]

``(2) determine whether such regulations are fair and not
deceptive and otherwise meet the objectives of the Consumer
Financial Protection Act of 2010; and
``(3) promulgate regulations under subsection (a)(4) after
the designated transfer date.
``(e) Designated Transfer Date.--As used in this section,
the term `designated transfer date' means the date determined
under section 1062 of the Consumer Financial Protection Act
of 2010.''.
(b) Effective Date.--This section and the amendments made
by this section shall become effective on the designated
transfer date.
(c) Rule of Construction.--The amendments made by
subsection (a) shall not affect any transaction covered by
the Alternative Mortgage Transaction Parity Act of l982 (12
U.S.C. 3801 et seq.) and entered into on or before the
designated transfer date.

SEC. 1084. AMENDMENTS TO THE ELECTRONIC FUND TRANSFER ACT.

The Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.)
is amended--
(1) by striking ``Board'' each place that term appears and
inserting ``Bureau'', except in section 918 (as so designated
by the Credit Card Act of 2009) (15 U.S.C. 1693o);
(2) in section 903 (15 U.S.C. 1693a), by striking paragraph
(3) and inserting the following:
``(3) the term `Bureau' means the Bureau of Consumer
Financial Protection;'';
(3) in section 916(d) (as so designated by section 401 of
the Credit CARD Act of 2009) (15 U.S.C. 1693m)--
(A) by striking ``Federal Reserve System'' and inserting
``Bureau of Consumer Financial Protection''; and
(B) by striking ``Federal Reserve System'' and inserting
``Bureau of Consumer Financial Protection''; and
(4) in section 918 (as so designated by the Credit CARD Act
of 2009) (15 U.S.C. 1693o)--
(A) in subsection (a)--
(i) by striking ``Compliance'' and inserting ``Except as
otherwise provided by subtitle B of the Consumer Financial
Protection Act of 2010, compliance''; and
(ii) by striking paragraph (2) and inserting the following:
``(2) subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau;''; and
(B) by striking subsection (c) and inserting the following:
``(c) Overall Enforcement Authority of the Federal Trade
Commission.--Except to the extent that enforcement of the
requirements imposed under this title is specifically
committed to some other Government agency under subsection
(a), and subject to subtitle B of the Consumer Financial
Protection Act of 2010, the Federal Trade Commission shall
enforce such requirements. For the purpose of the exercise by
the Federal Trade Commission of its functions and powers
under the Federal Trade Commission Act, a violation of any
requirement imposed under this title shall be deemed a
violation of a requirement imposed under that Act. All of the
functions and powers of the Federal Trade Commission under
the Federal Trade Commission Act are available to the Federal
Trade Commission to enforce compliance by any person subject
to the jurisdiction of the Federal Trade Commission with the
requirements imposed under this title, irrespective of
whether that person is engaged in commerce or meets any other
jurisdictional tests under the Federal Trade Commission
Act.''.

SEC. 1085. AMENDMENTS TO THE EQUAL CREDIT OPPORTUNITY ACT.

The Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.)
is amended--
(1) by striking ``Board'' each place that term appears and
inserting ``Bureau'';
(2) in section 702 (15 U.S.C. 1691a), by striking
subsection (c) and inserting the following:
``(c) The term `Bureau' means the Bureau of Consumer
Financial Protection.'';
(3) in section 703 (15 U.S.C. 1691b)--
(A) by striking the section heading and inserting the
following:

``SEC. 703. PROMULGATION OF REGULATIONS BY THE BUREAU.'';

(B) by striking ``(a) Regulations.--'';
(C) by striking subsection (b);
(D) by redesignating paragraphs (1) through (5) as
subsections (a) through (e), respectively; and
(E) in subsection (c), as so redesignated, by striking
``paragraph (2)'' and inserting ``subsection (b)'';
(4) in section 704 (15 U.S.C. 1691c)--
(A) in subsection (a)--
(i) by striking ``Compliance'' and inserting ``Except as
otherwise provided by subtitle B of the Consumer Protection
Financial Protection Act of 2010''; and
(ii) by striking paragraph (2) and inserting the following:
``(2) Subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau.'';
(B) by striking subsection (c) and inserting the following:
``(c) Overall Enforcement Authority of Federal Trade
Commission.--Except to the extent that enforcement of the
requirements imposed under this title is specifically
committed to some other Government agency under subsection
(a), and subject to subtitle B of the Consumer Financial
Protection Act of 2010, the Federal Trade Commission shall
enforce such requirements. For the purpose of the exercise by
the Federal Trade Commission of its functions and powers
under the Federal Trade Commission Act (15 U.S.C. 41 et
seq.), a violation of any requirement imposed under this
subchapter shall be deemed a violation of a requirement
imposed under that Act. All of the functions and powers of
the Federal Trade Commission under the Federal Trade
Commission Act are available to the Federal Trade Commission
to enforce compliance by any person with the requirements
imposed under this title, irrespective of whether that person
is engaged in commerce or meets any other jurisdictional
tests under the Federal Trade Commission Act, including the
power to enforce any rule prescribed by the Bureau under this
title in the same manner as if the violation had been a
violation of a Federal Trade Commission trade regulation
rule.''; and
(C) in subsection (d), by striking ``Board'' and inserting
``Bureau''; and
(5) in section 706(e) (15 U.S.C. 1691e(e))--
(A) in the subsection heading--
(i) by striking ``Board'' each place that term appears and
inserting ``Bureau''; and
(ii) by striking ``Federal Reserve System'' and inserting
``Bureau of Consumer Financial Protection''; and
(B) by striking ``Federal Reserve System'' and inserting
``Bureau of Consumer Financial Protection''.

SEC. 1086. AMENDMENTS TO THE EXPEDITED FUNDS AVAILABILITY
ACT.

(a) Amendment to Section 603.--Section 603(d)(1) of the
Expedited Funds Availability Act (12 U.S.C. 4002) is amended
by inserting after ``Board'' the following ``, jointly with
the Director of the Bureau of Consumer Financial
Protection,''.
(b) Amendments to Section 604.--Section 604 of the
Expedited Funds Availability Act (12 U.S.C. 4003) is
amended--
(1) by inserting after ``Board'' each place that term
appears, other than in subsection (f), the following: ``,
jointly with the Director of the Bureau of Consumer Financial
Protection,''; and
(2) in subsection (f), by striking ``Board.'' each place
that term appears and inserting the following: ``Board,
jointly with the Director of the Bureau of Consumer Financial
Protection.''.
(c) Amendments to Section 605.--Section 605 of the
Expedited Funds Availability Act (12 U.S.C. 4004) is
amended--
(1) by inserting after ``Board'' each place that term
appears, other than in the heading for section 605(f)(1), the
following: ``, jointly with the Director of the Bureau of
Consumer Financial Protection,''; and
(2) in subsection (f)(1), in the paragraph heading, by
inserting ``and bureau'' after ``board''.
(d) Amendments to Section 609.--Section 609 of the
Expedited Funds Availability Act (12 U.S.C. 4008) is amended:
(1) in subsection (a), by inserting after ``Board'' the
following ``, jointly with the Director of the Bureau of
Consumer Financial Protection,''; and
(2) by striking subsection (e) and inserting the following:
``(e) Consultations.--In prescribing regulations under
subsections (a) and (b), the Board and the Director of the
Bureau of Consumer Financial Protection, in the case of
subsection (a), and the Board, in the case of subsection (b),
shall consult with the Comptroller of the Currency, the Board
of Directors of the Federal Deposit Insurance Corporation,
and the National Credit Union Administration Board.''.
(e) Expedited Funds Availability Improvements.--Section 603
of the Expedited Funds Availability Act (12 U.S.C. 4002) is
amended--
(1) in subsection (a)(2)(D), by striking ``$100'' and
inserting ``$200''; and
(2) in subsection (b)(3)(C), in the subparagraph heading,
by striking ``$100'' and inserting ``$200''; and
(3) in subsection (c)(1)(B)(iii), in the clause heading, by
striking ``$100'' and inserting ``$200''.
(f) Regular Adjustments for Inflation.--Section 607 of the
Expedited Funds Availability Act (12 U.S.C. 4006) is amended
by adding at the end the following:
``(f) Adjustments to Dollar Amounts for Inflation.--The
dollar amounts under this title shall be adjusted every 5
years after December 31, 2011, by the annual percentage
increase in the Consumer Price Index for Urban Wage Earners
and Clerical Workers, as published by the Bureau of Labor
Statistics, rounded to the nearest multiple of $25.''.

SEC. 1087. AMENDMENTS TO THE FAIR CREDIT BILLING ACT.

The Fair Credit Billing Act (15 U.S.C. 1666-1666j) is
amended by striking ``Board'' each place that term appears
and inserting ``Bureau''.

SEC. 1088. AMENDMENTS TO THE FAIR CREDIT REPORTING ACT AND
THE FAIR AND ACCURATE CREDIT TRANSACTIONS ACT.

(a) Fair Credit Reporting Act.--The Fair Credit Reporting
Act (15 U.S.C. 1681 et seq.) is amended--
(1) in section 603 (15 U.S.C. 1681a)--
(A) by redesignating subsections (w) and (x) as subsections
(x) and (y), respectively; and
(B) by inserting after subsection (v) the following:
``(w) The term `Bureau' means the Bureau of Consumer
Financial Protection.''; and
(2) except as otherwise specifically provided in this
subsection--
(A) by striking ``Federal Trade Commission'' each place
that term appears and inserting ``Bureau'';
(B) by striking ``FTC'' each place that term appears and
inserting ``Bureau'';

[[Page S2964]]

(C) by striking ``the Commission'' each place that term
appears and inserting ``the Bureau''; and
(D) by striking ``The Federal banking agencies, the
National Credit Union Administration, and the Commission
shall jointly'' each place that term appears and inserting
``The Bureau shall'';
(3) in section 603(k)(2) (15 U.S.C. 1681a(k)(2)), by
striking ``Board of Governors of the Federal Reserve System''
and inserting ``Bureau'';
(4) in section 604(g) (15 U.S.C. 1681b(g))--
(A) in paragraph (3), by striking subparagraph (C) and
inserting the following:
``(C) as otherwise determined to be necessary and
appropriate, by regulation or order, by the Bureau
(consistent with the enforcement authorities prescribed under
section 621(b)), or the applicable State insurance authority
(with respect to any person engaged in providing insurance or
annuities).'';
(B) by striking paragraph (5) and inserting the following:
``(5) Regulations and effective date for paragraph (2).--
``(A) Regulations required.--The Bureau may, after notice
and opportunity for comment, prescribe regulations that
permit transactions under paragraph (2) that are determined
to be necessary and appropriate to protect legitimate
operational, transactional, risk, consumer, and other needs
(and which shall include permitting actions necessary for
administrative verification purposes), consistent with the
intent of paragraph (2) to restrict the use of medical
information for inappropriate purposes.''; and
(C) by striking paragraph (6);
(5) in section 611(e)(2) (15 U.S.C. 1681i(e)), by striking
paragraph (2) and inserting the following:
``(2) Exclusion.--Complaints received or obtained by the
Bureau pursuant to its investigative authority under the
Consumer Financial Protection Act of 2010 shall not be
subject to paragraph (1).'';
(6) in section 615(h)(6) (15 U.S.C. 1681m(h)(6)), by
striking subparagraph (A) and inserting the following:
``(A) Rules required.--The Bureau shall prescribe rules to
carry out this subsection.'';
(7) in section 621 (15 U.S.C. 1681s)--
(A) by striking subsection (a) and inserting the following:
``(a) Enforcement by Federal Trade Commission.--
``(1) In general.--Except as otherwise provided by subtitle
B of the Consumer Financial Protection Act of 2010,
compliance with the requirements imposed under this title
shall be enforced under the Federal Trade Commission Act (15
U.S.C. 41 et seq.) by the Federal Trade Commission, with
respect to consumer reporting agencies and all other persons
subject thereto, except to the extent that enforcement of the
requirements imposed under this title is specifically
committed to some other Government agency under subsection
(b). For the purpose of the exercise by the Federal Trade
Commission of its functions and powers under the Federal
Trade Commission Act, a violation of any requirement or
prohibition imposed under this title shall constitute an
unfair or deceptive act or practice in commerce, in violation
of section 5(a) of the Federal Trade Commission Act (15
U.S.C. 45(a)), and shall be subject to enforcement by the
Federal Trade Commission under section 5(b) of that Act with
respect to any consumer reporting agency or person that is
subject to enforcement by the Federal Trade Commission
pursuant to this subsection, irrespective of whether that
person is engaged in commerce or meets any other
jurisdictional tests under the Federal Trade Commission Act.
The Federal Trade Commission shall have such procedural,
investigative, and enforcement powers (except as otherwise
provided by subtitle B of the Consumer Financial Protection
Act of 2010), including the power to issue procedural rules
in enforcing compliance with the requirements imposed under
this title and to require the filing of reports, the
production of documents, and the appearance of witnesses, as
though the applicable terms and conditions of the Federal
Trade Commission Act were part of this title. Any person
violating any of the provisions of this title shall be
subject to the penalties and entitled to the privileges and
immunities provided in the Federal Trade Commission Act as
though the applicable terms and provisions of such Act are
part of this title.
``(2) Penalties.--
``(A) Knowing violations.--Except as otherwise provided by
subtitle B of the Consumer Financial Protection Act of 2010,
in the event of a knowing violation, which constitutes a
pattern or practice of violations of this title, the Federal
Trade Commission may commence a civil action to recover a
civil penalty in a district court of the United States
against any person that violates this title. In such action,
such person shall be liable for a civil penalty of not more
than $2,500 per violation.
``(B) Determining penalty amount.--In determining the
amount of a civil penalty under subparagraph (A), the court
shall take into account the degree of culpability, any
history of such prior conduct, ability to pay, effect on
ability to continue to do business, and such other matters as
justice may require.
``(C) Limitation.--Notwithstanding paragraph (2), a court
may not impose any civil penalty on a person for a violation
of section 623(a)(1), unless the person has been enjoined
from committing the violation, or ordered not to commit the
violation, in an action or proceeding brought by or on behalf
of the Federal Trade Commission, and has violated the
injunction or order, and the court may not impose any civil
penalty for any violation occurring before the date of the
violation of the injunction or order.'';
(8) by striking subsection (b) and inserting the following:
``(b) Enforcement by Other Agencies.--
``(1) In general.--Except as otherwise provided by subtitle
B of the Consumer Financial Protection Act of 2010,
compliance with the requirements imposed under this title
with respect to consumer reporting agencies, persons who use
consumer reports from such agencies, persons who furnish
information to such agencies, and users of information that
are subject to section 615(d) shall be enforced under--
``(A) section 8 of the Federal Deposit Insurance Act (12
U.S.C. 1818), in the case of--
``(i) any national bank, and any Federal branch or Federal
agency of a foreign bank, by the Office of the Comptroller of
the Currency;
``(ii) any member bank of the Federal Reserve System (other
than a national bank), a branch or agency of a foreign bank
(other than a Federal branch, Federal agency, or insured
State branch of a foreign bank), a commercial lending company
owned or controlled by a foreign bank, and any organization
operating under section 25 or 25A of the Federal Reserve Act,
by the Board of Governors of the Federal Reserve System; and
``(iii) any bank insured by the Federal Deposit Insurance
Corporation (other than a member of the Federal Reserve
System) and any insured State branch of a foreign bank, by
the Board of Directors of the Federal Deposit Insurance
Corporation;
``(B) subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau;
``(C) the Federal Credit Union Act (12 U.S.C. 1751 et
seq.), by the Administrator of the National Credit Union
Administration with respect to any Federal credit union;
``(D) subtitle IV of title 49, United States Code, by the
Secretary of Transportation, with respect to all carriers
subject to the jurisdiction of the Surface Transportation
Board;
``(E) the Federal Aviation Act of 1958 (49 U.S.C. App. 1301
et seq.), by the Secretary of Transportation, with respect to
any air carrier or foreign air carrier subject to that Act;
``(F) the Packers and Stockyards Act, 1921 (7 U.S.C. 181 et
seq.) (except as provided in section 406 of that Act), by the
Secretary of Agriculture, with respect to any activities
subject to that Act;
``(G) the Commodity Exchange Act, with respect to a person
subject to the jurisdiction of the Commodity Futures Trading
Commission; and
``(H) the Federal securities laws, and any other laws that
are subject to the jurisdiction of the Securities and
Exchange Commission, with respect to a person that is subject
to the jurisdiction of the Securities and Exchange
Commission.
``(2) Incorporated definitions.--The terms used in
paragraph (1) that are not defined in this title or otherwise
defined in section 3(s) of the Federal Deposit Insurance Act
(12 U.S.C. 1813(s)) have the same meanings as in section 1(b)
of the International Banking Act of 1978 (12 U.S.C. 3101).'';
(9) by striking subsection (e) and inserting the following:
``(e) Regulatory Authority.--The Bureau shall prescribe
such regulations as are necessary to carry out the purposes
of this Act. The regulations prescribed by the Bureau under
this subsection shall apply to any person that is subject to
this Act, notwithstanding the enforcement authorities granted
to other agencies under this section.''; and
(10) in section 623 (15 U.S.C. 1681s-2)--
(A) in subsection (a)(7), by striking subparagraph (D) and
inserting the following:
``(D) Model disclosure.--
``(i) Duty of bureau.--The Bureau shall prescribe a brief
model disclosure that a financial institution may use to
comply with subparagraph (A), which shall not exceed 30
words.
``(ii) Use of model not required.--No provision of this
paragraph may be construed to require a financial institution
to use any such model form prescribed by the Bureau.
``(iii) Compliance using model.--A financial institution
shall be deemed to be in compliance with subparagraph (A) if
the financial institution uses any model form prescribed by
the Bureau under this subparagraph, or the financial
institution uses any such model form and rearranges its
format.''; and
(B) by striking subsection (e) and inserting the following:
``(e) Accuracy Guidelines and Regulations Required.--
``(1) Guidelines.--The Bureau shall, with respect to
persons or entities that are subject to the enforcement
authority of the Bureau under section 621--
``(A) establish and maintain guidelines for use by each
person that furnishes information to a consumer reporting
agency regarding the accuracy and integrity of the
information relating to consumers that such entities furnish
to consumer reporting agencies, and update such guidelines as
often as necessary; and

[[Page S2965]]

``(B) prescribe regulations requiring each person that
furnishes information to a consumer reporting agency to
establish reasonable policies and procedures for implementing
the guidelines established pursuant to subparagraph (A).
``(2) Criteria.--In developing the guidelines required by
paragraph (1)(A), the Bureau shall--
``(A) identify patterns, practices, and specific forms of
activity that can compromise the accuracy and integrity of
information furnished to consumer reporting agencies;
``(B) review the methods (including technological means)
used to furnish information relating to consumers to consumer
reporting agencies;
``(C) determine whether persons that furnish information to
consumer reporting agencies maintain and enforce policies to
ensure the accuracy and integrity of information furnished to
consumer reporting agencies; and
``(D) examine the policies and processes that persons that
furnish information to consumer reporting agencies employ to
conduct reinvestigations and correct inaccurate information
relating to consumers that has been furnished to consumer
reporting agencies.''.
(b) Fair and Accurate Credit Transactions Act of 2003.--
Section 214(b)(1) of the Fair and Accurate Credit
Transactions Act of 2003 (15 U.S.C. 1681s-3 note) is amended
by striking paragraph (1) and inserting the following:
``(1) In general.--Regulations to carry out section 624 of
the Fair Credit Reporting Act (15 U.S.C. 1681s-3), shall be
prescribed, as described in paragraph (2), by--
``(A) the Commodity Futures Trading Commission, with
respect to entities subject to its enforcement authorities;
``(B) the Securities and Exchange Commission, with respect
to entities subject to its enforcement authorities; and
``(C) the Bureau, with respect to other entities subject to
this Act.''.

SEC. 1089. AMENDMENTS TO THE FAIR DEBT COLLECTION PRACTICES
ACT.

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et
seq.) is amended--
(1) by striking ``Commission'' each place that term appears
and inserting ``Bureau'';
(2) in section 803 (15 U.S.C. 1692a)--
(A) by striking paragraph (1) and inserting the following:
``(1) The term `Bureau' means the Bureau of Consumer
Financial Protection.'';
(3) in section 814 (15 U.S.C. 1692l)--
(A) by striking subsection (a) and inserting the following:
``(a) Federal Trade Commission.--Except as otherwise
provided by subtitle B of the Consumer Financial Protection
Act of 2010, compliance with this title shall be enforced by
the Federal Trade Commission, except to the extent that
enforcement of the requirements imposed under this title is
specifically committed to another Government agency under
subsection (b). For purpose of the exercise by the Federal
Trade Commission of its functions and powers under the
Federal Trade Commission Act (15 U.S.C. 41 et seq.), a
violation of this title shall be deemed an unfair or
deceptive act or practice in violation of that Act. All of
the functions and powers of the Federal Trade Commission
under the Federal Trade Commission Act are available to the
Federal Trade Commission to enforce compliance by any person
with this title, irrespective of whether that person is
engaged in commerce or meets any other jurisdictional tests
under the Federal Trade Commission Act, including the power
to enforce the provisions of this title, in the same manner
as if the violation had been a violation of a Federal Trade
Commission trade regulation rule.''; and
(B) in subsection (b)--
(i) by striking ``Compliance'' and inserting ``Except as
otherwise provided by subtitle B of the Consumer Financial
Protection Act of 2010, compliance''; and
(ii) by striking paragraph (2) and inserting the following:
``(2) subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau;''; and
(4) in subsection (d), by striking ``Neither the
Commission'' and all that follows through the end of the
subsection and inserting the following: ``The Bureau may
prescribe rules with respect to the collection of debts by
debt collectors, as defined in this Act.''.

SEC. 1090. AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT.

The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.)
is amended--
(1) in section 8(t) (12 U.S.C. 1818(t)), by adding at the
end the following:
``(6) Referral to bureau of consumer financial
protection.--Subject to subtitle B of the Consumer Financial
Protection Act of 2010, each appropriate Federal banking
agency shall make a referral to the Bureau of Consumer
Financial Protection when the Federal banking agency has a
reasonable belief that a violation of an enumerated consumer
law, as defined in the Consumer Financial Protection Act of
2010, has been committed by any insured depository
institution or institution-affiliated party within the
jurisdiction of that appropriate Federal banking agency.'';
and
(2) in section 43 (12 U.S.C. 1831t)--
(A) in subsection (c), by striking ``Federal Trade
Commission'' and inserting ``Bureau'';
(B) in subsection (d), by striking ``Federal Trade
Commission'' and inserting ``Bureau'';
(C) in subsection (e)--
(i) in paragraph (2), by striking ``Federal Trade
Commission'' and inserting ``Bureau''; and
(ii) by adding at the end the following new paragraph:
``(5) Bureau.--The term `Bureau' means the Bureau of
Consumer Financial Protection.''; and
(D) in subsection (f)--
(i) by striking paragraph (1) and inserting the following:
``(1) Limited enforcement authority.--Compliance with the
requirements of subsections (b), (c), and (e), and any
regulation prescribed or order issued under such subsection,
shall be enforced under the Consumer Financial Protection Act
of 2010, by the Bureau, subject to subtitle B of the Consumer
Financial Protection Act of 2010, and under the Federal Trade
Commission Act (15 U.S.C. 41 et seq.) by the Federal Trade
Commission.''; and
(ii) in paragraph (2), by striking subparagraph (C) and
inserting the following:
``(C) Limitation on state action while federal action
pending.--If the Bureau or Federal Trade Commission has
instituted an enforcement action for a violation of this
section, no appropriate State supervisory agency may, during
the pendency of such action, bring an action under this
section against any defendant named in the complaint of the
Bureau or Federal Trade Commission for any violation of this
section that is alleged in that complaint.''.

SEC. 1091. AMENDMENTS TO THE GRAMM-LEACH-BLILEY ACT.

Title V of the Gramm-Leach-Bliley Act (15 U.S.C. 6801 et
seq.) is amended--
(1) in section 504(a)(1) (15 U.S.C. 6804(a)(1))--
(A) by striking ``The Federal banking agencies, the
National Credit Union Administration, the Secretary of the
Treasury,'' and inserting ``The Bureau of Consumer Financial
Protection and''; and
(B) by striking ``, and the Federal Trade Commission'';
(2) in section 505(a) (15 U.S.C. 6805(a))--
(A) by striking ``This subtitle'' and all that follows
through ``as follows:'' and inserting ``Except as otherwise
provided by subtitle B of the Consumer Financial Protection
Act of 2010, this subtitle and the regulations prescribed
thereunder shall be enforced by the Bureau of Consumer
Financial Protection, the Federal functional regulators, the
State insurance authorities, and the Federal Trade Commission
with respect to financial institutions and other persons
subject to their jurisdiction under applicable law, as
follows:'';
(B) in paragraph (1)--
(i) in subparagraph (B), by inserting ``and'' after the
semicolon;
(ii) in subparagraph (C), by striking ``; and'' and
inserting a period; and
(iii) by striking subparagraph (D); and
(C) by adding at the end the following:
``(8) Under the Consumer Financial Protection Act of 2010,
by the Bureau of Consumer Financial Protection, in the case
of any financial institution and other covered person or
service provider that is subject to the jurisdiction of the
Bureau under that Act, but not with respect to the standards
under section 501.''; and
(3) in section 505(b)(1) (15 U.S.C. 6805(b)(1)), by
inserting ``, other than the Bureau of Consumer Financial
Protection,'' after ``subsection (a)''.

SEC. 1092. AMENDMENTS TO THE HOME MORTGAGE DISCLOSURE ACT.

The Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2801 et
seq.) is amended--
(1) except as otherwise specifically provided in this
section, by striking ``Board'' each place that term appears
and inserting ``Bureau'';
(2) in section 303 (12 U.S.C. 2802)--
(A) by redesignating paragraphs (1) through (6) as
paragraphs (2) through (7), respectively; and
(B) by inserting before paragraph (2) the following:
``(1) the term `Bureau' means the Bureau of Consumer
Financial Protection;'';
(3) in section 304 (12 U.S.C. 2803)--
(A) in subsection (b)--
(i) in paragraph (4), by inserting ``age,'' before ``and
gender'';
(ii) in paragraph (3), by striking ``and'' at the end;
(iii) in paragraph (4), by striking the period at the end
and inserting a semicolon; and
(iv) by adding at the end the following:
``(5) the number and dollar amount of mortgage loans
grouped according to measurements of--
``(A) the total points and fees payable at origination in
connection with the mortgage as determined by the Bureau,
taking into account 15 U.S.C. 1602(aa)(4);
``(B) the difference between the annual percentage rate
associated with the loan and a benchmark rate or rates for
all loans;
``(C) the term in months of any prepayment penalty or other
fee or charge payable on repayment of some portion of
principal or the entire principal in advance of scheduled
payments; and
``(D) such other information as the Bureau may require; and
``(6) the number and dollar amount of mortgage loans and
completed applications grouped according to measurements of--
``(A) the value of the real property pledged or proposed to
be pledged as collateral;
``(B) the actual or proposed term in months of any
introductory period after which the rate of interest may
change;

[[Page S2966]]

``(C) the presence of contractual terms or proposed
contractual terms that would allow the mortgagor or applicant
to make payments other than fully amortizing payments during
any portion of the loan term;
``(D) the actual or proposed term in months of the mortgage
loan;
``(E) the channel through which application was made,
including retail, broker, and other relevant categories;
``(F) as the Bureau may determine to be appropriate, a
unique identifier that identifies the loan originator as set
forth in section 1503 of the S.A.F.E. Mortgage Licensing Act
of 2008;
``(G) as the Bureau may determine to be appropriate, a
universal loan identifier;
``(H) as the Bureau may determine to be appropriate, the
parcel number that corresponds to the real property pledged
or proposed to be pledged as collateral;
``(I) the credit score of mortgage applicants and
mortgagors, in such form as the Bureau may prescribe, except
that the Bureau shall modify or require modification of
credit score data that is or will be available to the public
to protect the compelling privacy interest of the mortgage
applicant or mortgagors; and
``(J) such other information as the Bureau may require.'';
(B) in subsection (i), by striking ``subsection (b)(4)''
and inserting ``subsections (b)(4), (b)(5), and (b)(6)'';
(C) in subsection (j)--
(i) in paragraph (1), by striking ``(as'' and inserting
``(containing loan-level and application-level information
relating to disclosures required under subsections (a) and
(b) and as otherwise'';
(ii) by striking paragraph (3) and inserting the following:
``(3) Change of form not required.--A depository
institution meets the disclosure requirement of paragraph (1)
if the institution provides the information required under
such paragraph in such formats as the Bureau may require'';
and
(iii) in paragraph (2)(A), by striking ``in the format in
which such information is maintained by the institution'' and
inserting ``in such formats as the Bureau may require'';
(D) in subsection (m), by striking paragraph (2) and
inserting the following:
``(2) Form of information.--In complying with paragraph
(1), a depository institution shall provide the person
requesting the information with a copy of the information
requested in such formats as the Bureau may require'';
(E) by striking subsection (h) and inserting the following:
``(h) Submission to Agencies.--
``(1) In general.--The data required to be disclosed under
subsection (b) shall be submitted to the Bureau or to the
appropriate agency for the institution reporting under this
title, in accordance with rules prescribed by the Bureau.
Notwithstanding the requirement of subsection (a)(2)(A) for
disclosure by census tract, the Bureau, in cooperation with
other appropriate regulators described in paragraph (2),
shall develop regulations that--
``(A) prescribe the format for such disclosures, the method
for submission of the data to the appropriate regulatory
agency, and the procedures for disclosing the information to
the public;
``(B) require the collection of data required to be
disclosed under subsection (b) with respect to loans sold by
each institution reporting under this title;
``(C) require disclosure of the class of the purchaser of
such loans; and
``(D) permit any reporting institution to submit in writing
to the Bureau or to the appropriate agency such additional
data or explanations as it deems relevant to the decision to
originate or purchase mortgage loans.
``(2) Other appropriate agencies.--The appropriate
regulators described in this paragraph are--
``(A) the Office of the Comptroller of the Currency
(hereafter referred to in this Act as `Comptroller') for
national banks and Federal branches, Federal agencies of
foreign banks, and savings associations;
``(B) the Federal Deposit Insurance Corporation for banks
insured by the Federal Deposit Insurance Corporation (other
than members of the Federal Reserve System), mutual savings
banks, insured State branches of foreign banks, and any other
depository institution described in section 303(2)(A) which
is not otherwise referred to in this paragraph;
``(C) the National Credit Union Administration Board for
credit unions; and
``(D) the Secretary of Housing and Urban Development for
other lending institutions not regulated by the agencies
referred to in subparagraphs (A) through (C).''; and
(F) by adding at the end the following:
``(n) Timing of Certain Disclosures.--The data required to
be disclosed under subsection (b) shall be submitted to the
Bureau or to the appropriate agency for any institution
reporting under this title, in accordance with regulations
prescribed by the Bureau. Institutions shall not be required
to report new data under paragraph (5) or (6) of subsection
(b) before the first January 1 that occurs after the end of
the 9-month period beginning on the date on which regulations
are issued by the Bureau in final form with respect to such
disclosures.'';
(4) in section 305 (12 U.S.C. 2804)--
(A) by striking subsection (b) and inserting the following:
``(b) Powers of Certain Other Agencies.--
``(1) In general.--Except as otherwise provided by subtitle
B of the Consumer Financial Protection Act of 2010,
compliance with the requirements of this title shall be
enforced--
``(A) under section 8 of the Federal Deposit Insurance Act,
in the case of--
``(i) any national bank, and any Federal branch or Federal
agency of a foreign bank, by the Office of the Comptroller of
the Currency;
``(ii) any member bank of the Federal Reserve System (other
than a national bank), branch or agency of a foreign bank
(other than a Federal branch, Federal agency, and insured
State branch of a foreign bank), commercial lending company
owned or controlled by a foreign bank, and any organization
operating under section 25 or 25(a) of the Federal Reserve
Act, by the Board; and
``(iii) any bank insured by the Federal Deposit Insurance
Corporation (other than a member of the Federal Reserve
System), any mutual savings bank as, defined in section 3(f)
of the Federal Deposit Insurance Act (12 U.S.C. 1813(f)), any
insured State branch of a foreign bank, and any other
depository institution not referred to in this paragraph or
subparagraph (B) or (C), by the Federal Deposit Insurance
Corporation;
``(B) under subtitle E of the Consumer Financial Protection
Act of 2010, by the Bureau;
``(C) under the Federal Credit Union Act, by the
Administrator of the National Credit Union Administration
with respect to any insured credit union; and
``(D) with respect to other lending institutions, by the
Secretary of Housing and Urban Development.
``(2) Incorporated definitions.--The terms used in
paragraph (1) that are not defined in this title or otherwise
defined in section 3(s) of the Federal Deposit Insurance Act
(12 U.S.C. 1813(s)) shall have the same meanings as in
section 1(b) of the International Banking Act of 1978 (12
U.S.C. 3101).''; and
(B) by adding at the end the following:
``(d) Overall Enforcement Authority of the Bureau of
Consumer Financial Protection.--Subject to subtitle B of the
Consumer Financial Protection Act of 2010, enforcement of the
requirements imposed under this title is committed to each of
the agencies under subsection (b). The Bureau may exercise
its authorities under the Consumer Financial Protection Act
of 2010 to exercise principal authority to examine and
enforce compliance by any person with the requirements of
this title.'';
(5) in section 306 (12 U.S.C. 2805(b)), by striking
subsection (b) and inserting the following:
``(b) Exemption Authority.--The Bureau may, by regulation,
exempt from the requirements of this title any State-
chartered depository institution within any State or
subdivision thereof, if the agency determines that, under the
law of such State or subdivision, that institution is subject
to requirements that are substantially similar to those
imposed under this title, and that such law contains adequate
provisions for enforcement. Notwithstanding any other
provision of this subsection, compliance with the
requirements imposed under this subsection shall be enforced
by the Office of the Comptroller of the Currency under
section 8 of the Federal Deposit Insurance Act, in the case
of national banks and savings associations, the deposits of
which are insured by the Federal Deposit Insurance
Corporation.''; and
(6) by striking section 307 (12 U.S.C. 2806) and inserting
the following:

``SEC. 307. COMPLIANCE IMPROVEMENT METHODS.

``(a) In General.--
``(1) Consultation required.--The Director of the Bureau of
Consumer Financial Protection, with the assistance of the
Secretary, the Director of the Bureau of the Census, the
Board of Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation, and such other persons as the
Bureau deems appropriate, shall develop or assist in the
improvement of, methods of matching addresses and census
tracts to facilitate compliance by depository institutions in
as economical a manner as possible with the requirements of
this title.
``(2) Authorization of appropriations.--There are
authorized to be appropriated, such sums as may be necessary
to carry out this subsection.
``(3) Contracting authority.--The Director of the Bureau of
Consumer Financial Protection is authorized to utilize,
contract with, act through, or compensate any person or
agency in order to carry out this subsection.
``(b) Recommendations to Congress.--The Director of the
Bureau of Consumer Financial Protection shall recommend to
the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House
of Representatives, such additional legislation as the
Director of the Bureau of Consumer Financial Protection deems
appropriate to carry out the purpose of this title.''.

SEC. 1093. AMENDMENTS TO THE HOMEOWNERS PROTECTION ACT OF
1998.

Section 10 of the Homeowners Protection Act of 1998 (12
U.S.C. 4909) is amended--
(1) in subsection (a)--
(A) by striking ``Compliance'' and inserting ``Except as
otherwise provided by subtitle B of the Consumer Financial
Protection Act of 2010, compliance'';
(B) in paragraph (2), by striking ``and'' at the end;

[[Page S2967]]

(C) in paragraph (3), by striking the period at the end and
inserting ``; and''; and
(D) by adding at the end the following:
``(4) subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau of Consumer Financial Protection.'';
and
(2) in subsection (b)(2), by inserting before the period at
the end the following: ``, subject to subtitle B of the
Consumer Financial Protection Act of 2010''.

SEC. 1094. AMENDMENTS TO THE HOME OWNERSHIP AND EQUITY
PROTECTION ACT OF 1994.

The Home Ownership and Equity Protection Act of 1994 (15
U.S.C. 1601 note) is amended--
(1) in section 158(a), by striking ``Consumer Advisory
Council of the Board'' and inserting ``Advisory Board to the
Bureau''; and
(2) by striking ``Board'' each place that term appears and
inserting ``Bureau''.

SEC. 1095. AMENDMENTS TO THE OMNIBUS APPROPRIATIONS ACT,
2009.

Section 626 of the Omnibus Appropriations Act, 2009 (15
U.S.C. 1638 note) is amended--
(1) by striking subsection (a) and inserting the following:
``(a)(1) The Bureau of Consumer Financial Protection shall
have authority to prescribe rules with respect to mortgage
loans in accordance with section 553 of title 5, United
States Code. Such rulemaking shall relate to unfair or
deceptive acts or practices regarding mortgage loans, which
may include unfair or deceptive acts or practices involving
loan modification and foreclosure rescue services. Any
violation of a rule prescribed under this paragraph shall be
treated as a violation of a rule prohibiting unfair,
deceptive, or abusive acts or practices under the Consumer
Financial Protection Act of 2010 and a violation of a rule
under section 18 of the Federal Trade Commission Act (15
U.S.C. 57a) regarding unfair or deceptive acts or practices.
``(2) The Bureau of Consumer Financial Protection shall
enforce the rules issued under paragraph (1) in the same
manner, by the same means, and with the same jurisdiction,
powers, and duties, as though all applicable terms and
provisions of the Consumer Financial Protection Act of 2010
were incorporated into and made part of this subsection.'';
and
(2) in subsection (b)--
(A) by striking paragraph (1) and inserting the following:
``(1) Except as provided in paragraph (6), in any case in
which the attorney general of a State has reason to believe
that an interest of the residents of the State has been or is
threatened or adversely affected by the engagement of any
person subject to a rule prescribed under subsection (a) in
practices that violate such rule, the State, as parens
patriae, may bring a civil action on behalf of its residents
in an appropriate district court of the United States or
other court of competent jurisdiction--
``(A) to enjoin that practice;
``(B) to enforce compliance with the rule;
``(C) to obtain damages, restitution, or other compensation
on behalf of the residents of the State; or
``(D) to obtain penalties and relief provided under the
Consumer Financial Protection Act of 2010, the Federal Trade
Commission Act, and such other relief as the court deems
appropriate.'';
(B) in paragraphs (2) and (3), by striking ``the primary
Federal regulator'' each time the term appears and inserting
``the Bureau of Consumer Financial Protection or the
Commission, as appropriate'';
(C) in paragraph (3), by inserting ``and subject to
subtitle B of the Consumer Financial Protection Act of
2010,'' after ``paragraph (2),''; and
(D) in paragraph (6), by striking ``the primary Federal
regulator'' each place that term appears and inserting ``the
Bureau of Consumer Financial Protection or the Commission''.

SEC. 1096. AMENDMENTS TO THE REAL ESTATE SETTLEMENT
PROCEDURES ACT.

The Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2601 et seq.) is amended--
(1) in section 3 (12 U.S.C. 2602)--
(A) in paragraph (7), by striking ``and'' at the end;
(B) in paragraph (8), by striking the period at the end and
inserting ``; and''; and
(C) by adding at the end the following:
``(9) the term `Bureau' means the Bureau of Consumer
Financial Protection.'';
(2) in section 4 (12 U.S.C. 2603)--
(A) in subsection (a), by striking the first sentence and
inserting the following: ``The Bureau shall publish a single,
integrated disclosure for mortgage loan transactions
(including real estate settlement cost statements) which
includes the disclosure requirements of this title, in
conjunction with the disclosure requirements of the Truth in
Lending Act that, taken together, may apply to a transaction
that is subject to both or either provisions of law. The
purpose of such model disclosure shall be to facilitate
compliance with the disclosure requirements of this title and
the Truth in Lending Act, and to aid the borrower or lessee
in understanding the transaction by utilizing readily
understandable language to simplify the technical nature of
the disclosures.'';
(B) by striking ``Secretary'' each place that term appears
and inserting ``Bureau''; and
(C) by striking ``form'' each place that term appears and
inserting ``forms'';
(3) in section 5 (12 U.S.C. 2604)--
(A) by striking ``Secretary'' each place that term appears
and inserting ``Bureau''; and
(B) in subsection (a), by striking the first sentence and
inserting the following: ``The Bureau shall prepare and
distribute booklets jointly addressing compliance with the
requirements of the Truth in Lending Act and the provisions
of this title, in order to help persons borrowing money to
finance the purchase of residential real estate better to
understand the nature and costs of real estate settlement
services.'';
(4) in section 6(j)(3) (12 U.S.C. 2605(j)(3))--
(A) by striking ``Secretary'' and inserting ``Bureau''; and
(B) by striking ``, by regulations that shall take effect
not later than April 20, 1991,'';
(5) in section 7(b) (12 U.S.C. 2606(b)) by striking
``Secretary'' and inserting ``Bureau'';
(6) in section 8(d) (12 U.S.C. 2607(d))--
(A) in the subsection heading, by inserting ``Bureau and''
before ``Secretary''; and
(B) by striking paragraph (4), and inserting the following:
``(4) The Bureau, the Secretary, or the attorney general or
the insurance commissioner of any State may bring an action
to enjoin violations of this section. Except, to the extent
that a person is subject to the jurisdiction of the Bureau,
the Secretary, or the attorney general or the insurance
commissioner of any State, the Bureau shall have primary
authority to enforce or administer this section, subject to
subtitle B of the Consumer Financial Protection Act of
2010.''.
(7) in section 10(c) (12 U.S.C. 2609(c) and (d)), by
striking ``Secretary'' and inserting ``Bureau'';
(8) in section 16 (12 U.S.C. 2614), by inserting ``the
Bureau,'' before ``the Secretary'';
(9) in section 18 (12 U.S.C. 2616), by striking
``Secretary'' each place that term appears and inserting
``Bureau''; and
(10) in section 19 (12 U.S.C. 2617)--
(A) in the section heading by striking ``SECRETARY'' and
inserting ``BUREAU'';
(B) by striking ``Secretary'' each place that term appears
and inserting ``Bureau'';
(C) in subsection (b), by inserting ``the Bureau'' before
``the Secretary''; and
(D) in subsection (c), by inserting ``or the Bureau'' after
``the Secretary'' each time that term appears.

SEC. 1097. AMENDMENTS TO THE RIGHT TO FINANCIAL PRIVACY ACT
OF 1978.

The Right to Financial Privacy Act of 1978 (12 U.S.C. 3401
et seq.) is amended--
(1) in section 1101--
(A) in paragraph (6)--
(i) in subparagraph (A), by inserting ``and'' after the
semicolon;
(ii) in subparagraph (B), by striking ``and'' at the end;
and
(iii) by striking subparagraph (C); and
(B) in paragraph (7), by striking subparagraph (E), and
inserting the following:
``(E) the Bureau of Consumer Financial Protection;'';
(2) in section 1112(e) (12 U.S.C. 3412(e)), by striking
``and the Commodity Futures Trading Commission is permitted''
and inserting ``the Commodity Futures Trading Commission, and
the Bureau of Consumer Financial Protection is permitted'';
and
(3) in section 1113 (12 U.S.C. 3413), by adding at the end
the following new subsection:
``(r) Disclosure to the Bureau of Consumer Financial
Protection.--Nothing in this title shall apply to the
examination by or disclosure to the Bureau of Consumer
Financial Protection of financial records or information in
the exercise of its authority with respect to a financial
institution.''.

SEC. 1098. AMENDMENTS TO THE SECURE AND FAIR ENFORCEMENT FOR
MORTGAGE LICENSING ACT OF 2008.

The S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C. 5101
et seq.) is amended--
(1) by striking ``a Federal banking agency'' each place
that term appears, other than in paragraphs (7) and (11) of
section 1503 and section 1507(a)(1), and inserting ``the
Bureau'';
(2) by striking ``Federal banking agencies'' each place
that term appears and inserting ``Bureau''; and
(3) by striking ``Secretary'' each place that term appears
and inserting ``Director'';
(4) in section 1503 (12 U.S.C. 5102)--
(A) by redesignating paragraphs (2) through (12) as (3)
through (13), respectively;
(B) by striking paragraph (1) and inserting the following:
``(1) Bureau.--The term `Bureau' means the Bureau of
Consumer Financial Protection.
``(2) Federal banking agency.--The term `Federal banking
agency' means the Board of Governors of the Federal Reserve
System, the Office of the Comptroller of the Currency, the
National Credit Union Administration, and the Federal Deposit
Insurance Corporation.''; and
(C) by striking paragraph (10), as so designated by this
section, and inserting the following:
``(10) Director.--The term `Director' means the Director of
the Bureau of Consumer Financial Protection.''; and
(5) in section 1507 (12 U.S.C. 5106)--
(A) in subsection (a)--
(i) by striking paragraph (1) and inserting the following:
``(1) In general.--The Bureau shall develop and maintain a
system for registering employees of a depository institution,
employees of a subsidiary that is owned and controlled by a
depository institution and regulated by a Federal banking
agency, or employees of an institution regulated by the Farm
Credit Administration, as registered

[[Page S2968]]

loan originators with the Nationwide Mortgage Licensing
System and Registry. The system shall be implemented before
the end of the 1-year period beginning on the date of
enactment of the Consumer Financial Protection Act of
2010.''; and
(ii) in paragraph (2)--

(I) by striking ``appropriate Federal banking agency and
the Farm Credit Administration'' and inserting ``Bureau'';
and
(II) by striking ``employees's identity'' and inserting
``identity of the employee''; and

(B) in subsection (b), by striking ``through the Financial
Institutions Examination Council, and the Farm Credit
Administration'', and inserting ``and the Bureau of Consumer
Financial Protection'';
(6) in section 1508 (12 U.S.C. 5107)--
(A) by striking the section heading and inserting the
following: ``SEC. 1508. BUREAU OF CONSUMER FINANCIAL
PROTECTION BACKUP AUTHORITY TO ESTABLISH LOAN ORIGINATOR
LICENSING SYSTEM.''; and
(B) by adding at the end the following:
``(f) Regulation Authority.--
``(1) In general.--The Bureau is authorized to promulgate
regulations setting minimum net worth or surety bond
requirements for residential mortgage loan originators and
minimum requirements for recovery funds paid into by loan
originators.
``(2) Considerations.--In issuing regulations under
paragraph (1), the Bureau shall take into account the need to
provide originators adequate incentives to originate
affordable and sustainable mortgage loans, as well as the
need to ensure a competitive origination market that
maximizes consumer access to affordable and sustainable
mortgage loans.'';
(7) by striking section 1510 (12 U.S.C. 5109) and inserting
the following:

``SEC. 1510. FEES.

``The Bureau, the Farm Credit Administration, and the
Nationwide Mortgage Licensing System and Registry may charge
reasonable fees to cover the costs of maintaining and
providing access to information from the Nationwide Mortgage
Licensing System and Registry, to the extent that such fees
are not charged to consumers for access to such system and
registry.'';
(8) by striking section 1513 (12 U.S.C. 5112) and inserting
the following:

``SEC. 1513. LIABILITY PROVISIONS.

``The Bureau, any State official or agency, or any
organization serving as the administrator of the Nationwide
Mortgage Licensing System and Registry or a system
established by the Director under section 1509, or any
officer or employee of any such entity, shall not be subject
to any civil action or proceeding for monetary damages by
reason of the good faith action or omission of any officer or
employee of any such entity, while acting within the scope of
office or employment, relating to the collection, furnishing,
or dissemination of information concerning persons who are
loan originators or are applying for licensing or
registration as loan originators.''; and
(9) in section 1514 (12 U.S.C. 5113) in the section
heading, by striking ``UNDER HUD BACKUP LICENSING SYSTEM''
and inserting ``BY THE BUREAU''.

SEC. 1099. AMENDMENTS TO THE TRUTH IN LENDING ACT.

The Truth in Lending Act (15 U.S.C. 1601 et seq.) is
amended--
(1) in section 103 (5 U.S.C. 1602)--
(A) by redesignating subsections (b) through (bb) as
subsections (c) through (cc), respectively; and
(B) by inserting after subsection (a) the following:
``(b) Bureau.--The term `Bureau' means the Bureau of
Consumer Financial Protection.'';
(2) by striking ``Board'' each place that term appears,
other than in section 140(d) and section 108(a), as amended
by this section, and inserting ``Bureau'';
(3) by striking ``Federal Trade Commission'' each place
that term appears, other than in section 108(c) and section
129(m), as amended by this Act, and other than in the context
of a reference to the Federal Trade Commission Act, and
inserting ``Bureau'';
(4) in section 105(a) (15 U.S.C. 1604(a)), in the second
sentence--
(A) by striking ``Except in the case of a mortgage referred
to in section 103(aa), these regulations may contain such''
and inserting ``Except with respect to the provisions of
section 129 that apply to a mortgage referred to in section
103(aa), such regulations may contain such additional
requirements,''; and
(B) by inserting ``all or'' after ``exceptions for'';
(5) in section 105(b) (15 U.S.C. 1604(b)), by striking the
first sentence and inserting the following: ``The Bureau
shall publish a single, integrated disclosure for mortgage
loan transactions (including real estate settlement cost
statements) which includes the disclosure requirements of
this title in conjunction with the disclosure requirements of
the Real Estate Settlement Procedures Act of 1974 that, taken
together, may apply to a transaction that is subject to both
or either provisions of law. The purpose of such model
disclosure shall be to facilitate compliance with the
disclosure requirements of this title and the Real Estate
Settlement Procedures Act of 1974, and to aid the borrower or
lessee in understanding the transaction by utilizing readily
understandable language to simplify the technical nature of
the disclosures.'';
(6) in section 105(f)(1) (15 U.S.C. 1604(f)(1)), by
inserting ``all or'' after ``from all or part of this
title'';
(7) in section 108 (15 U.S.C. 1607)--
(A) by striking subsection (a) and inserting the following:
``(a) Enforcing Agencies.--Except as otherwise provided in
subtitle B of the Consumer Financial Protection Act of 2010,
compliance with the requirements imposed under this title
shall be enforced under--
``(1) section 8 of the Federal Deposit Insurance Act, in
the case of--
``(A) any national bank, and Federal branch or Federal
agency of a foreign bank, by the Office of the Comptroller of
the Currency;
``(B) any member bank of the Federal Reserve System (other
than a national bank), any branch or agency of a foreign bank
(other than a Federal branch, Federal agency, or insured
State branch of a foreign bank), any commercial lending
company owned or controlled by a foreign bank, and
organizations operating under section 25 or 25(a) of the
Federal Reserve Act, by the Board; and
``(C) any bank insured by the Federal Deposit Insurance
Corporation (other than a member of the Federal Reserve
System) and an insured State branch of a foreign bank, by the
Board of Directors of the Federal Deposit Insurance
Corporation;
``(2) subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau;
``(3) the Federal Credit Union Act, by the Director of the
National Credit Union Administration, with respect to any
Federal credit union;
``(4) the Federal Aviation Act of 1958, by the Secretary of
Transportation, with respect to any air carrier or foreign
air carrier subject to that Act;
``(5) the Packers and Stockyards Act, 1921 (except as
provided in section 406 of that Act), by the Secretary of
Agriculture, with respect to any activities subject to that
Act; and
``(6) the Farm Credit Act of 1971, by the Farm Credit
Administration with respect to any Federal land bank, Federal
land bank association, Federal intermediate credit bank, or
production credit association.''; and
(B) by striking subsection (c) and inserting the following:
``(c) Overall Enforcement Authority of the Federal Trade
Commission.--Except to the extent that enforcement of the
requirements imposed under this title is specifically
committed to some other Government agency under subsection
(a), and subject to subtitle B of the Consumer Financial
Protection Act of 2010, the Federal Trade Commission shall
enforce such requirements. For the purpose of the exercise by
the Federal Trade Commission of its functions and powers
under the Federal Trade Commission Act, a violation of any
requirement imposed under this title shall be deemed a
violation of a requirement imposed under that Act. All of the
functions and powers of the Federal Trade Commission under
the Federal Trade Commission Act are available to the Federal
Trade Commission to enforce compliance by any person with the
requirements under this title, irrespective of whether that
person is engaged in commerce or meets any other
jurisdictional tests under the Federal Trade Commission
Act.'';
(8) in section 129 (15 U.S.C. 1639), by striking subsection
(m) and inserting the following:
``(m) Civil Penalties in Federal Trade Commission
Enforcement Actions.--For purposes of enforcement by the
Federal Trade Commission, any violation of a regulation
issued by the Bureau pursuant to subsection (l)(2) shall be
treated as a violation of a rule promulgated under section 18
of the Federal Trade Commission Act (15 U.S.C. 57a) regarding
unfair or deceptive acts or practices.''; and
(9) in chapter 5 (15 U.S.C. 1667 et seq.)--
(A) by striking ``the Board'' each place that term appears
and inserting ``the Bureau''; and
(B) by striking ``The Board'' each place that term appears
and inserting ``The Bureau''.

SEC. 1100. AMENDMENTS TO THE TRUTH IN SAVINGS ACT.

The Truth in Savings Act (12 U.S.C. 4301 et seq.) is
amended--
(1) by striking ``Board'' each place that term appears and
inserting ``Bureau'';
(2) in section 270(a) (12 U.S.C. 4309)--
(A) by striking ``Compliance'' and inserting ``Except as
otherwise provided in subtitle B of the Consumer Financial
Protection Act of 2010, compliance'';
(B) in paragraph (1)--
(i) in subparagraph (B), by striking ``and'' at the end;
and
(ii) by striking subparagraph (C);
(C) in paragraph (2), by striking the period at the end and
inserting ``; and''; and
(D) by adding at the end the following:
``(3) subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau.'';
(3) in section 272(b) (12 U.S.C. 4311(b)), by striking
``regulation prescribed by the Board'' each place that term
appears and inserting ``regulation prescribed by the
Bureau''; and
(4) in section 274 (12 U.S.C. 4313), by striking paragraph
(4) and inserting the following:
``(4) Bureau.--The term `Bureau' means the Bureau of
Consumer Financial Protection.''.

SEC. 1101. AMENDMENTS TO THE TELEMARKETING AND CONSUMER FRAUD
AND ABUSE PREVENTION ACT.

(a) Amendments to Section 3.--Section 3 of the
Telemarketing and Consumer Fraud and Abuse Prevention Act (15
U.S.C. 6102) is amended by striking subsections (b) and (c)
and inserting the following:

[[Page S2969]]

``(b) Rulemaking Authority.--The Commission shall have
authority to prescribe rules under subsection (a), in
accordance with section 553 of title 5, United States Code.
In prescribing a rule under this section that relates to the
provision of a consumer financial product or service that is
subject to the Consumer Financial Protection Act of 2010,
including any enumerated consumer law thereunder, the
Commission shall consult with the Bureau of Consumer
Financial Protection regarding the consistency of a proposed
rule with standards, purposes, or objectives administered by
the Bureau of Consumer Financial Protection.
``(c) Violations.--Any violation of any rule prescribed
under subsection (a)--
``(1) shall be treated as a violation of a rule under
section 18 of the Federal Trade Commission Act regarding
unfair or deceptive acts or practices; and
``(2) that is committed by a person subject to the Consumer
Financial Protection Act of 2010 shall be treated as a
violation of a rule under section 1031 of that Act regarding
unfair, deceptive, or abusive acts or practices.''.
(b) Amendments to Section 4.--Section 4(d) of the
Telemarketing and Consumer Fraud and Abuse Prevention Act (15
U.S.C. 6103(d)) is amended by inserting after ``Commission''
each place that term appears the following: ``or the Bureau
of Consumer Financial Protection''.
(c) Amendments to Section 5.--Section 5(c) of the
Telemarketing and Consumer Fraud and Abuse Prevention Act (15
U.S.C. 6104(c)) is amended by inserting after ``Commission''
each place that term appears the following: ``or the Bureau
of Consumer Financial Protection''.
(d) Amendment to Section 6.--Section 6 of the Telemarketing
and Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6105)
is amended by adding at the end the following:
``(d) Enforcement by Bureau of Consumer Financial
Protection.--Except as otherwise provided in sections 3(d),
3(e), 4, and 5, and subject to subtitle B of the Consumer
Financial Protection Act of 2010, this Act shall be enforced
by the Bureau of Consumer Financial Protection under subtitle
E of the Consumer Financial Protection Act of 2010.''.

SEC. 1102. AMENDMENTS TO THE PAPERWORK REDUCTION ACT.

(a) Designation as an Independent Agency.--Section 2(5) of
the Paperwork Reduction Act (44 U.S.C. 3502(5)) is amended by
inserting ``the Bureau of Consumer Financial Protection, the
Office of Financial Research,'' after ``the Securities and
Exchange Commission,''.
(b) Comparable Treatment.--Section 3513 of title 44, United
States Code, is amended by adding at the end the following:
``(c) Comparable Treatment.--Notwithstanding any other
provision of law, the Director shall treat or review a rule
or order prescribed or proposed by the Director of the Bureau
of Consumer Financial Protection on the same terms and
conditions as apply to any rule or order prescribed or
proposed by the Board of Governors of the Federal Reserve
System.''.

SEC. 1103. ADJUSTMENTS FOR INFLATION IN THE TRUTH IN LENDING
ACT.

(a) Caps.--
(1) Credit transactions.--Section 104(3) of the Truth in
Lending Act (15 U.S.C. 1603(3)) is amended by striking
``$25,000'' and inserting ``$50,000''.
(2) Consumer leases.--Section 181(1) of the Truth in
Lending Act (15 U.S.C. 1667(1)) is amended by striking
``$25,000'' and inserting ``$50,000''.
(b) Adjustments for Inflation.--On and after December 31,
2011, the Bureau may adjust annually the dollar amounts
described in sections 104(3) and 181(1) of the Truth in
Lending Act (as amended by this section), by the annual
percentage increase in the Consumer Price Index for Urban
Wage Earners and Clerical Workers, as published by the Bureau
of Labor Statistics, rounded to the nearest multiple of $100,
or $1,000, as applicable.

SEC. 1104. EFFECTIVE DATE.

Except as otherwise provided in this subtitle and the
amendments made by this subtitle, this subtitle and the
amendments made by this subtitle, other than sections 1081
and 1082, shall become effective on the designated transfer
date.

TITLE XI--FEDERAL RESERVE SYSTEM PROVISIONS

SEC. 1151. FEDERAL RESERVE ACT AMENDMENTS ON EMERGENCY
LENDING AUTHORITY.

The third undesignated paragraph of section 13 of the
Federal Reserve Act (12 U.S.C. 343) (relating to emergency
lending authority) is amended--
(1) by inserting ``(3)(A)'' before ``In unusual'';
(2) by striking ``individual, partnership, or corporation''
the first place that term appears and inserting the
following: ``participant in any program or facility with
broad-based eligibility'';
(3) by striking ``exchange for an individual or a
partnership or corporation'' and inserting ``exchange,'';
(4) by striking ``such individual, partnership, or
corporation'' and inserting the following: ``such participant
in any program or facility with broad-based eligibility'';
(5) by striking ``for individuals, partnerships,
corporations'' and inserting ``for any participant in any
program or facility with broad-based eligibility'';
(6) by striking ``may prescribe.'' and inserting the
following: ``may prescribe.
``(B)(i) As soon as is practicable after the date of
enactment of this subparagraph, the Board shall establish, by
regulation, in consultation with the Secretary of the
Treasury, the policies and procedures governing emergency
lending under this paragraph. Such policies and procedures
shall be designed to ensure that any emergency lending
program or facility is for the purpose of providing liquidity
to the financial system, and not to aid a failing financial
company, and that the collateral for emergency loans is of
sufficient quality to protect taxpayers from losses.
``(ii) The Board may not establish any program or facility
under this paragraph without the prior approval of the
Secretary of the Treasury.
``(C) The Board shall provide to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives--
``(i) not later than 7 days after providing any loan or
other financial assistance under this paragraph, a report
that includes--

``(I) the justification for the exercise of authority to
provide such assistance;
``(II) the identity of the recipients of such assistance,
subject to subparagraph (D);
``(III) the date and amount of the assistance, and form in
which the assistance was provided; and
``(IV) the material terms of the assistance, including--

``(aa) duration;
``(bb) collateral pledged and the value thereof;
``(cc) all interest, fees, and other revenue or items of
value to be received in exchange for the assistance;
``(dd) any requirements imposed on the recipient with
respect to employee compensation, distribution of dividends,
or any other corporate decision in exchange for the
assistance; and
``(ee) the expected costs to the taxpayers of such
assistance; and
``(ii) once every 30 days, with respect to any outstanding
loan or other financial assistance under this paragraph,
written updates on--

``(I) the value of collateral;
``(II) the amount of interest, fees, and other revenue or
items of value received in exchange for the assistance; and
``(III) the expected or final cost to the taxpayers of such
assistance.

``(D)(i) The Board shall disclose, not later than 1 year
after the date on which assistance was first received under
the program or facility, unless the Board determines that
such disclosure likely would reduce the effectiveness of the
program or facility in addressing or mitigating the financial
market disruptions, financial market conditions, or other
unusual and exigent circumstances sought to be addressed or
mitigated by the program or facility, or would otherwise have
a significant effect on economic or financial market
conditions--
``(I) the identity of the participants in an emergency
lending program or facility commenced under this paragraph;
``(II) the amounts borrowed by each participant in any such
program or facility; and
``(III) identifying details concerning the assets or
collateral held by, under, or in connection with such a
program or facility within 1 year of the date on which
assistance was first received under the program or facility.
``(ii) If the Board determines not to make the disclosures
required by clause (i) within 1 year of the date on which a
participant first received assistance under a program or
facility, the Board shall--
``(I) provide to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives a written report
explaining the reasons for delaying the disclosures about
such program or facility not later than 30 days after making
such determination; and
``(II) provide to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives each year thereafter
a written report explaining the reasons for continuing to
delay disclosure, until the disclosures are complete.
``(iii) The disclosures required by clause (i) shall be
made not later than 12 months after the effective date of the
termination of the facility by the Board.
``(iv) If the Board determines not to make the disclosures
required by clause (i), the Comptroller General of the United
States shall issue 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 evaluating
whether that determination is reasonable.''.

SEC. 1152. REVIEWS OF SPECIAL FEDERAL RESERVE CREDIT
FACILITIES.

(a) Reviews.--Section 714 of title 31, United States Code,
is amended by adding at the end the following:
``(f) Reviews of Credit Facilities of the Federal Reserve
System.--
``(1) Definition.--In this subsection, the term `credit
facility' means a program or facility, including any special
purpose vehicle or other entity established by or on behalf
of the Board of Governors of the Federal Reserve System or a
Federal reserve bank, authorized by the Board of Governors
under the third undesignated paragraph of section 13 of the
Federal Reserve Act (12 U.S.C. 343), that

[[Page S2970]]

is not subject to audit under subsection (e), including--
``(A) the Asset-Backed Commercial Paper Money Market Mutual
Fund Liquidity Facility;
``(B) the Term Asset-Backed Securities Loan Facility;
``(C) the Primary Dealer Credit Facility;
``(D) the Commercial Paper Funding Facility; and
``(E) the Term Securities Lending Facility.
``(2) Authority for reviews and examinations.--Subject to
paragraph (3), and notwithstanding any limitation in
subsection (b) on the auditing and oversight of certain
functions of the Board of Governors of the Federal Reserve
System or any Federal reserve bank, the Comptroller General
of the United States may conduct reviews, including onsite
examinations, of the Board of Governors, a Federal reserve
bank, or a credit facility, if the Comptroller General
determines that such reviews are appropriate, solely for the
purposes of assessing, with respect to a credit facility--
``(A) the operational integrity, accounting, financial
reporting, and internal controls of the credit facility;
``(B) the effectiveness of the collateral policies
established for the facility in mitigating risk to the
relevant Federal reserve bank and taxpayers;
``(C) whether the credit facility inappropriately favors
one or more specific participants over other institutions
eligible to utilize the facility; and
``(D) the policies governing the use, selection, or payment
of third-party contractors by or for any credit facility.
``(3) Reports and delayed disclosure.--
``(A) Reports required.--A report on each review conducted
under paragraph (2) shall be submitted by the Comptroller
General to the Congress before the end of the 90-day period
beginning on the date on which such review is completed.
``(B) Contents.--The report under subparagraph (A) shall
include a detailed description of the findings and
conclusions of the Comptroller General with respect to the
matters described in paragraph (2) that were reviewed and are
the subject of the report, together with such recommendations
for legislative or administrative action relating to such
matters as the Comptroller General may determine to be
appropriate.
``(C) Delayed release of certain information.--
``(i) In general.--The Comptroller General shall not
disclose to any person or entity, including to Congress, the
names or identifying details of specific participants in any
credit facility, the amounts borrowed by specific
participants in any credit facility, or identifying details
regarding assets or collateral held by, under, or in
connection with any credit facility, and any report provided
under subparagraph (A) shall be redacted to ensure that such
names and details are not disclosed.
``(ii) Delayed release.--The nondisclosure obligation under
clause (i) shall expire with respect to any participant on
the date on which the Board of Governors, directly or through
a Federal reserve bank, publicly discloses the identity of
the subject participant or the identifying details of the
subject assets or collateral.
``(iii) General release.--The Comptroller General shall
release a nonredacted version of any report on a credit
facility 1 year after the effective date of the termination
by the Board of Governors of the authorization for the credit
facility. For purposes of this clause, a credit facility
shall be deemed to have terminated 24 months after the date
on which the credit facility ceases to make extensions of
credit and loans, unless the credit facility is otherwise
terminated by the Board of Governors.
``(iv) Exceptions.--The nondisclosure obligation under
clause (i) shall not apply to the credit facilities Maiden
Lane, Maiden Lane II, and Maiden Lane III.''.
(b) Access to Records.--Section 714(d) of title 31, United
States Code, is amended--
(1) in paragraph (2), by inserting ``or any person or
entity described in paragraph (3)(A)'' after ``used by an
agency'';
(2) in paragraph (3), by inserting ``or (f)'' after
``subsection (e)'' each place that term appears; and
(3) in paragraph (3)(B), by adding at the end the
following: ``The Comptroller General may make and retain
copies of books, accounts, and other records provided under
subparagraph (A) as the Comptroller General deems
appropriate. The Comptroller General shall provide to any
person or entity described in subparagraph (A) a current list
of officers and employees to whom, with proper
identification, records and property may be made available,
and who may make notes or copies necessary to carry out a
review or examination under this subsection.''.

SEC. 1153. PUBLIC ACCESS TO INFORMATION.

Section 2B of the Federal Reserve Act (12 U.S.C. 225b) is
amended by adding at the end the following:
``(c) Public Access to Information.--The Board shall place
on its home Internet website, a link entitled `Audit', which
shall link to a webpage that shall serve as a repository of
information made available to the public for a reasonable
period of time, not less than 6 months following the date of
release of the relevant information, including--
``(1) the reports prepared by the Comptroller General under
section 714 of title 31, United States Code;
``(2) the annual financial statements prepared by an
independent auditor for the Board in accordance with section
11B;
``(3) the reports to the Committee on Banking, Housing, and
Urban Affairs of the Senate required under the third
undesignated paragraph of section 13 (relating to emergency
lending authority); and
``(4) such other information as the Board reasonably
believes is necessary or helpful to the public in
understanding the accounting, financial reporting, and
internal controls of the Board and the Federal reserve
banks.''.

SEC. 1154. LIQUIDITY EVENT DETERMINATION.

(a) Determination and Written Recommendation.--
(1) Determination request.--The Secretary may request the
Corporation and the Board of Governors to determine whether a
liquidity event exists that warrants use of the guarantee
program authorized under section 1155.
(2) Requirements of determination.--Any determination
pursuant to paragraph (1) shall--
(A) be written; and
(B) contain an evaluation of the evidence that--
(i) a liquidity event exists;
(ii) failure to take action would have serious adverse
effects on financial stability or economic conditions in the
United States; and
(iii) actions authorized under section 1155 are needed to
avoid or mitigate potential adverse effects on the United
States financial system or economic conditions.
(b) Procedures.--Notwithstanding any other provision of
Federal or State law, upon the determination of both the
Corporation (upon a vote of not fewer than \2/3\ of the
members of the Corporation then serving) and the Board of
Governors (upon a vote of not fewer than \2/3\ of the members
of the Board of Governors then serving) under subsection (a)
that a liquidity event exists that warrants use of the
guarantee program authorized under section 1155, and with the
written consent of the Secretary--
(1) the Corporation shall take action in accordance with
section 1155(a); and
(2) the Secretary (in consultation with the President)
shall take action in accordance with section 1155(c).
(c) Documentation and Review.--
(1) Documentation.--The Secretary shall--
(A) maintain the written documentation of each
determination of the Corporation and the Board of Governors
under this section; and
(B) provide the documentation for review under paragraph
(2).
(2) GAO review.--The Comptroller General of the United
States shall review and report to Congress on any
determination of the Corporation and the Board of Governors
under subsection (a), including--
(A) the basis for the determination; and
(B) the likely effect of the actions taken.
(d) Report to Congress.--On the earlier of the date of a
submission made to Congress under section 1155(c), or within
30 days of the date of a determination under subsection (a),
the Secretary shall provide written notice of the
determination of the Corporation and the Board of Governors
to the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Committee on Financial Services of the
House of Representatives, including a description of the
basis for the determination.

SEC. 1155. EMERGENCY FINANCIAL STABILIZATION.

(a) In General.--Upon the written determination of the
Corporation and the Board of Governors under section 1154,
the Corporation shall create a widely available program to
guarantee obligations of solvent insured depository
institutions or solvent depository institution holding
companies (including any affiliates thereof) during times of
severe economic distress, except that a guarantee of
obligations under this section may not include the provision
of equity in any form.
(b) Rulemaking and Terms and Conditions.--
(1) Policies and procedures.--As soon as is practicable
after the date of enactment of this Act, the Corporation
shall establish, by regulation, and in consultation with the
Secretary, policies and procedures governing the issuance of
guarantees authorized by this section. Such policies and
procedures may include a requirement of collateral as a
condition of any such guarantee.
(2) Terms and conditions.--The terms and conditions of any
guarantee program shall be established by the Corporation,
with the concurrence of the Secretary.
(c) Determination of Guaranteed Amount.--
(1) In general.--In connection with any program established
pursuant to subsection (a) and subject to paragraph (2) of
this subsection, the Secretary (in consultation with the
President) shall determine the maximum amount of debt
outstanding that the Corporation may guarantee under this
section, and the President may transmit to Congress a written
report on the plan of the Corporation to exercise the
authority under this section to issue guarantees up to that
maximum amount. Upon the expiration of the 5-calendar-day
period beginning on the date on which Congress receives the
report on the plan of the Corporation, the Corporation may
exercise the authority under this section to issue guarantees
up to that specified maximum amount, unless there is enacted,
within that 5-calendar-day period, a joint resolution
disapproving such report, as provided in subsection (d).

[[Page S2971]]

(2) Additional debt guarantee authority.--If the Secretary
(in consultation with the President) determines, after a
submission to Congress under paragraph (1), that the maximum
guarantee amount should be raised, and the Council concurs
with that determination, the President may transmit to
Congress a written report on the plan of the Corporation to
exercise the authority under this section to issue guarantees
up to the increased maximum debt guarantee amount. Upon the
expiration of the 5-calendar-day period beginning on the date
on which Congress receives the report on the plan of the
Corporation, the Corporation may exercise the authority under
this section to issue guarantees up to that specified maximum
amount, unless there is enacted, within that 5-calendar-day
period, a joint resolution disapproving such report, as
provided in subsection (d).
(d) Joint Resolution.--
(1) Fast track consideration in house of representatives.--
(A) Contents of joint resolution.--For purposes of this
section, the term ``joint resolution'' means only a joint
resolution--
(i) that is introduced not later than 3 calendar days after
the date on which the report of the Secretary referred to in
section 1154(d) is received by Congress;
(ii) that does not have a preamble;
(iii) the title of which is as follows: ``Joint resolution
relating to the disapproval of a plan to guarantee
obligations under section 1155 of the Restoring American
Financial Stability Act of 2010''; and
(iv) the matter after the resolving clause of which is as
follows: ``That Congress disapproves the obligation of any
amount described in section 1155(c) of the Restoring American
Financial Stability Act of 2010.''.
(B) Reconvening.--Upon receipt of a report under subsection
(c), the Speaker, if the House of Representatives would
otherwise be adjourned, shall notify the Members of the House
of Representatives that, pursuant to this section, the House
of Representatives shall convene not later than the second
calendar day after the date of receipt of such report.
(C) Reporting and discharge.--Any committee of the House of
Representatives to which a joint resolution is referred shall
report it to the House of Representatives not later than 4
calendar days after the date of receipt of the report under
subsection (c). If a committee fails to report the joint
resolution within that period, the committee shall be
discharged from further consideration of the joint resolution
and the joint resolution shall be referred to the appropriate
calendar.
(D) Proceeding to consideration.--After each committee
authorized to consider a joint resolution reports it to the
House of Representatives or has been discharged from its
consideration, it shall be in order, not later than the 5th
day after Congress receives the report under subsection (c),
to move to proceed to consider the joint resolution in the
House of Representatives. All points of order against the
motion are waived. Such a motion shall not be in order after
the House of Representatives has disposed of a motion to
proceed on the joint resolution. The previous question shall
be considered as ordered on the motion to its adoption
without intervening motion. The motion shall not be
debatable. A motion to reconsider the vote by which the
motion is disposed of shall not be in order.
(E) Consideration.--The joint resolution shall be
considered as read. All points of order against the joint
resolution and against its consideration are waived. The
previous question shall be considered as ordered on the joint
resolution to its passage without intervening motion except 2
hours of debate equally divided and controlled by the
proponent and an opponent. A motion to reconsider the vote on
passage of the joint resolution shall not be in order.
(2) Fast track consideration in senate.--
(A) Reconvening.--Upon receipt of a report under subsection
(c), if the Senate has adjourned or recessed for more than 2
days, the majority leader of the Senate, after consultation
with the minority leader of the Senate, shall notify the
Members of the Senate that, pursuant to this section, the
Senate shall convene not later than the second calendar day
after receipt of such message.
(B) Placement on calendar.--Upon introduction in the
Senate, the joint resolution shall be placed immediately on
the calendar.
(C) Floor consideration.--
(i) In general.--Notwithstanding Rule XXII of the Standing
Rules of the Senate, it is in order at any time during the
period beginning on the 4th day after the date on which
Congress receives a report under subsection (c), and ending
on the 5th day after the date on which Congress receives a
report under subsection (c) (even though a previous motion to
the same effect has been disagreed to) to move to proceed to
the consideration of the joint resolution, and all points of
order against the joint resolution (and against consideration
of the joint resolution) are waived. The motion to proceed is
not debatable. The motion is not subject to a motion to
postpone. A motion to reconsider the vote by which the motion
is agreed to or disagreed to shall not be in order. If a
motion to proceed to the consideration of the resolution is
agreed to, the joint resolution shall remain the unfinished
business until disposed of.
(ii) Debate.--Debate on the joint resolution, and on all
debatable motions and appeals in connection therewith, shall
be limited to not more than 10 hours, which shall be divided
equally between the majority and minority leaders or their
designees. A motion further to limit debate is in order and
not debatable. An amendment to, or a motion to postpone, or a
motion to proceed to the consideration of other business, or
a motion to recommit the joint resolution is not in order.
(iii) Vote on passage.--The vote on passage shall occur
immediately following the conclusion of the debate on the
joint resolution, and a single quorum call at the conclusion
of the debate if requested in accordance with the rules of
the Senate.
(iv) Rulings of the chair on procedure.--Appeals from the
decisions of the Chair relating to the application of the
rules of the Senate, as the case may be, to the procedure
relating to a joint resolution shall be decided without
debate.
(3) Rules relating to senate and house of
representatives.--
(A) Coordination with action by other house.--If, before
the passage by one House of a joint resolution of that House,
that House receives from the other House a joint resolution,
then the following procedures shall apply:
(i) The joint resolution of the other House shall not be
referred to a committee.
(ii) With respect to a joint resolution of the House
receiving the resolution--

(I) the procedure in that House shall be the same as if no
joint resolution had been received from the other House; but
(II) the vote on passage shall be on the joint resolution
of the other House.

(B) Treatment of joint resolution of other house.--If one
House fails to introduce or consider a joint resolution under
this section, the joint resolution of the other House shall
be entitled to expedited floor procedures under this section.
(C) Treatment of companion measures.--If, following passage
of the joint resolution in the Senate, the Senate then
receives the companion measure from the House of
Representatives, the companion measure shall not be
debatable.
(D) Consideration after passage.--
(i) In general.--If Congress passes a joint resolution, the
period beginning on the date the President is presented with
the joint resolution and ending on the date the President
takes action with respect to the joint resolution shall be
disregarded in computing the 5-day period described in
subsection (c).
(ii) Vetoes.--If the President vetoes the joint
resolution--

(I) the period beginning on the date the President vetoes
the joint resolution and ending on the date the Congress
receives the veto message with respect to the joint
resolution shall be disregarded in computing the 5-day period
described in subsection (c); and
(II) debate on a veto message in the Senate under this
section shall be 1 hour equally divided between the majority
and minority leaders or their designees.

(E) Rules of house of representatives and senate.--This
subsection is enacted by Congress--
(i) as an exercise of the rulemaking power of the Senate
and House of Representatives, respectively, and as such it is
deemed a part of the rules of each House, respectively, but
applicable only with respect to the procedure to be followed
in that House in the case of a joint resolution, and it
supersedes other rules only to the extent that it is
inconsistent with such rules; and
(ii) with full recognition of the constitutional right of
either House to change the rules (so far as relating to the
procedure of that House) at any time, in the same manner, and
to the same extent as in the case of any other rule of that
House.
(e) Funding.--
(1) Fees and other charges.--The Corporation shall charge
fees and other assessments to all participants in the program
established pursuant to this section, in such amounts as are
necessary to offset projected losses and administrative
expenses, including amounts borrowed pursuant to paragraph
(3), and such amounts shall be available to the Corporation.
(2) Excess funds.--If, at the conclusion of the program
established under this section, there are any excess funds
collected from the fees associated with such program, the
funds shall be deposited in the General Fund of the Treasury.
(3) Authority of corporation.--The Corporation--
(A) may borrow funds from the Secretary of the Treasury and
issue obligations of the Corporation to the Secretary for
amounts borrowed, and the amounts borrowed shall be available
to the Corporation for purposes of carrying out a program
established pursuant to this section, including the payment
of reasonable costs of administering the program, and the
obligations issued shall be repaid in full with interest
through fees and charges paid by participants in accordance
with paragraphs (1) and (4), as applicable; and
(B) may not borrow funds from the Deposit Insurance Fund
established pursuant to section 11(a)(4) of the Federal
Deposit Insurance Act.
(4) Backup special assessments.--To the extent that the
funds collected pursuant to paragraph (1) are insufficient to
cover any losses or expenses, including amounts borrowed
pursuant to paragraph (3), arising from a program established
pursuant to this section, the Corporation shall impose a
special assessment solely on participants in the program, in
amounts necessary to address

[[Page S2972]]

such insufficiency, and which shall be available to the
Corporation to cover such losses or expenses.
(5) Authority of the secretary.--The Secretary may purchase
any obligations issued under paragraph (3)(A). For such
purpose, the Secretary may use 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 that chapter 31 are extended to include such
purchases, and the amount of any securities issued under that
chapter 31 for such purpose shall be treated in the same
manner as securities issued under section 208(n)(3)(B).
(f) Rule of Construction.--For purposes of this section, a
guarantee of deposits held by insured depository institutions
shall not be treated as a debt guarantee program.
(g) Definitions.--For purposes of this section, the
following definitions shall apply:
(1) Company.--The term ``company'' means any entity other
than a natural person that is incorporated or organized under
Federal law or the laws of any State.
(2) Depository institution holding company.--The term
``depository institution holding company'' has the same
meaning as in section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813).
(3) Liquidity event.--The term ``liquidity event'' means--
(A) a reduction in the usual ability of financial market
participants--
(i) to sell a type of financial asset, without a
significant reduction in price; or
(ii) to borrow using that type of asset as collateral
without a significant increase in margin; or
(B) a significant reduction in the usual ability of
financial and nonfinancial market participants to obtain
unsecured credit.
(4) Solvent.--The term ``solvent'' means that the value of
the assets of an entity exceed its obligations to creditors.

SEC. 1156. ADDITIONAL RELATED AMENDMENTS.

(a) Suspension of Parallel Federal Deposit Insurance Act
Authority.--Effective upon the date of enactment of this
section, the Corporation may not exercise its authority under
section 13(c)(4)(G)(i) of the Federal Deposit Insurance Act
(12 U.S.C. 1823(c)(4)(G)(i)) to establish any widely
available debt guarantee program for which section 1155 would
provide authority.
(b) Mitigation.--Section 13(c)(4)(G)(i) of the Federal
Deposit Insurance Act (12 U.S.C. 1823(c)(4)(G)(i)) is amended
by striking ``such effects.'' and inserting ``such effects,
provided the insured depository institution has been placed
in receivership.''.
(c) Effect of Default on an FDIC Guarantee.--If an insured
depository institution or depository institution holding
company (as those terms are defined in section 3 of the
Federal Deposit Insurance Act) participating in a program
under section 1155, or any participant in a debt guarantee
program established pursuant to section 13(c)(4)(G)(i) of the
Federal Deposit Insurance Act defaults on any obligation
guaranteed by the Corporation after the date of enactment of
this Act, the Corporation shall--
(1) appoint itself as receiver for the insured depository
institution that defaults; and
(2) with respect to any other participating company that is
not an insured depository institution that defaults--
(A) require--
(i) consideration of whether a determination shall be made,
as provided in section 202 to resolve the company under
section 203; and
(ii) the company to file a petition for bankruptcy under
section 301 of title 11, United States Code, if the
Corporation is not appointed receiver pursuant to section 203
within 30 days of the date of default; or
(B) file a petition for involuntary bankruptcy on behalf of
the company under section 303 of title 11, United States
Code.

SEC. 1157. FEDERAL RESERVE ACT AMENDMENTS ON FEDERAL RESERVE
BANK GOVERNANCE.

The Federal Reserve Act (12 U.S.C. 221 et seq.) is amended
in section 4 by adding at the end the following:
``(25) Selection of the president of the federal reserve
bank of new york.--Notwithstanding any other provision of
this section, after the date of enactment of the Restoring
American Financial Stability Act of 2010, the president of
the Federal Reserve Bank of New York shall be appointed by
the President, by and with the advice and consent of the
Senate, for terms of 5 years.
``(26) Limitation on eligibility to vote for or serve as a
federal reserve bank director.--Notwithstanding any other
provision of this section, after the date of enactment of the
Restoring American Financial Stability Act of 2010, no
company, or subsidiary or affiliate of a company that is
supervised by the Board, may vote for members of the board of
directors of a Federal reserve bank, and no past or current
officer, director, or employee of such company, or subsidiary
or affiliate of such company, may serve as a member of the
board of directors of a Federal reserve bank.''.

SEC. 1158. AMENDMENTS TO THE FEDERAL RESERVE ACT RELATING TO
SUPERVISION AND REGULATION POLICY.

(a) Establishment of the Position of Vice Chairman for
Supervision.--
(1) Position established.--The second undesignated
paragraph of section 10 of the Federal Reserve Act (12 U.S.C.
242) (relating to the Chairman and Vice Chairman of the
Board) is amended by striking the third sentence and
inserting the following: ``Of the persons thus appointed, 1
shall be designated by the President, by and with the advice
and consent of the Senate, to serve as Chairman of the Board
for a term of 4 years, and 2 shall be designated by the
President, by and with the advice and consent of the Senate,
to serve as Vice Chairmen of the Board, each for a term of 4
years, 1 of whom shall serve in the absence of the Chairman,
as provided in the fourth undesignated paragraph of this
section, and 1 of whom shall be designated Vice Chairman for
Supervision. The Vice Chairman for Supervision shall develop
policy recommendations for the Board regarding supervision
and regulation of depository institution holding companies
and other financial firms supervised by the Board, and shall
oversee the supervision and regulation of such firms.''.
(2) Effective date.--The amendment made by subsection (a)
takes effect on the date of enactment of this title and
applies to individuals who are designated by the President on
or after that date to serve as Vice Chairman of Supervision.
(b) Financial Stability as Board Function.--Section 10 of
the Federal Reserve Act (12 U.S.C. 241) is amended by adding
at the end the following:
``(11) Financial stability function.--The Board of
Governors shall identify, measure, monitor, and mitigate
risks to the financial stability of the United States.''.
(c) Appearances Before Congress.--Section 10 of the Federal
Reserve Act (12 U.S.C. 241) is amended by adding at the end
the following:
``(12) Appearances before congress.--The Vice Chairman for
Supervision shall appear before the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives and at
semi-annual hearings regarding the efforts, activities,
objectives, and plans of the Board with respect to the
conduct of supervision and regulation of depository
institution holding companies and other financial firms
supervised by the Board.''.
(d) Board Responsibility To Set Supervision and Regulatory
Policy.--Section 11 of the Federal Reserve Act (12 U.S.C.
248) (relating to enumerated powers of the Board) is amended
by adding at the end of subsection (k) (relating to
delegation) the following: ``The Board of Governors may not
delegate to a Federal reserve bank its functions for the
establishment of policies for the supervision and regulation
of depository institution holding companies and other
financial firms supervised by the Board of Governors.''.

TITLE XII--IMPROVING ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS

SECTION 1201. SHORT TITLE.

This title may be cited as the ``Improving Access to
Mainstream Financial Institutions Act of 2010''.

SEC. 1202. PURPOSE.

The purpose of this title is to encourage initiatives for
financial products and services that are appropriate and
accessible for millions of Americans who are not fully
incorporated into the financial mainstream.

SEC. 1203. DEFINITIONS.

In this title, the following definitions shall apply:
(1) Account.--The term ``account'' means an agreement
between an individual and an eligible entity under which the
individual obtains from or through the entity 1 or more
banking products and services, and includes a deposit
account, a savings account (including a money market savings
account), an account for a closed-end loan, and other
products or services, as the Secretary deems appropriate.
(2) Community development financial institution.--The term
``community development financial institution'' has the same
meaning as in section 103(5) of the Community Development
Banking and Financial Institutions Act of 1994 (12 U.S.C.
4702(5)).
(3) Eligible entity.--The term ``eligible entity'' means--
(A) an organization described in section 501(c)(3) of the
Internal Revenue Code of 1986, and exempt from tax under
section 501(a) of such Code;
(B) a federally insured depository institution;
(C) a community development financial institution;
(D) a State, local, or tribal government entity; or
(E) a partnership or other joint venture comprised of 1 or
more of the entities described in subparagraphs (A) through
(D), in accordance with regulations prescribed by the
Secretary under this title.
(4) Federally insured depository institution.--The term
``federally insured depository institution'' means any
insured depository institution (as that term is defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813)) and any insured credit union (as that term is defined
in section 101 of the Federal Credit Union Act (12 U.S.C.
1752)).
(5) Payday loan.--The term ``payday loan'' means any
transaction in which a small cash advance is made to a
consumer in exchange for--
(A) the personal check or share draft of the consumer, in
the amount of the advance plus a fee, where presentment or
negotiation of such check or share draft is deferred by
agreement of the parties until a designated future date; or
(B) the authorization of the consumer to debit the
transaction account or share draft

[[Page S2973]]

account of the consumer, in the amount of the advance plus a
fee, where such account will be debited on or after a
designated future date.

SEC. 1204. EXPANDED ACCESS TO MAINSTREAM FINANCIAL
INSTITUTIONS.

(a) In General.--The Secretary is authorized to establish a
multiyear program of grants, cooperative agreements,
financial agency agreements, and similar contracts or
undertakings to promote initiatives designed--
(1) to enable low- and moderate-income individuals to
establish one or more accounts in a federally insured
depository institution that are appropriate to meet the
financial needs of such individuals; and
(2) to improve access to the provision of accounts, on
reasonable terms, for low- and moderate-income individuals.
(b) Program Eligibility and Activities.--
(1) In general.--The Secretary shall restrict participation
in any program established under subsection (a) to an
eligible entity. Subject to regulations prescribed by the
Secretary under this title, 1 or more eligible entities may
participate in 1 or several programs established under
subsection (a).
(2) Account activities.--Subject to regulations prescribed
by the Secretary, an eligible entity may, in participating in
a program established under subsection (a), offer or provide
to low- and moderate-income individuals products and services
relating to accounts, including--
(A) small-dollar value loans; and
(B) financial education and counseling relating to
conducting transactions in and managing accounts.

SEC. 1205. LOW-COST ALTERNATIVES TO PAYDAY LOANS.

(a) Grants Authorized.--The Secretary is authorized to
establish multiyear demonstration programs by means of
grants, cooperative agreements, financial agency agreements,
and similar contracts or undertakings, with eligible entities
to provide low-cost, small loans to consumers that will
provide alternatives to more costly payday loans.
(b) Terms and Conditions.--
(1) In general.--Loans under this section shall be made on
terms and conditions, and pursuant to lending practices, that
are reasonable for consumers.
(2) Financial literacy and education opportunities.--
(A) In general.--Each eligible entity awarded a grant under
this section shall promote and take appropriate steps to
ensure the provision of financial literacy and education
opportunities, such as relevant counseling services,
educational courses, or wealth building programs, to each
consumer provided with a loan pursuant to this section.
(B) Authority to expand access.--As part of the grants,
agreements, and undertakings established under this section,
the Secretary may implement reasonable measures or programs
designed to expand access to financial literacy and education
opportunities, including relevant counseling services,
educational courses, or wealth building programs to be
provided to individuals who obtain loans from eligible
entities under this section.

SEC. 1206. GRANTS TO ESTABLISH LOAN-LOSS RESERVE FUNDS.

The Community Development Banking and Financial
Institutions Act of 1994 (12 U.S.C. 4701 et seq.) is amended
by adding at the end the following:

``SEC. 122. GRANTS TO ESTABLISH LOAN-LOSS RESERVE FUNDS.

``(a) Purposes.--The purposes of this section are--
``(1) to make financial assistance available from the Fund
in order to help community development financial institutions
defray the costs of operating small dollar loan programs, by
providing the amounts necessary for such institutions to
establish their own loan loss reserve funds to mitigate some
of the losses on such small dollar loan programs; and
``(2) to encourage community development financial
institutions to establish and maintain small dollar loan
programs that would help give consumers access to mainstream
financial institutions and combat payday lending.
``(b) Grants.--
``(1) Loan-loss reserve fund grants.--The Fund shall make
grants to community development financial institutions or to
any partnership between such community development financial
institutions and any other federally insured depository
institution with a primary mission to serve targeted
investment areas, as such areas are defined under section
103(16), to enable such institutions or any partnership of
such institutions to establish a loan-loss reserve fund in
order to defray the costs of a small dollar loan program
established or maintained by such institution.
``(2) Matching requirement.--A community development
financial institution or any partnership of institutions
established pursuant to paragraph (1) shall provide non-
Federal matching funds in an amount equal to 50 percent of
the amount of any grant received under this section.
``(3) Use of funds.--Any grant amounts received by a
community development financial institution or any
partnership between or among such institutions under
paragraph (1)--
``(A) may not be used by such institution to provide direct
loans to consumers;
``(B) may be used by such institution to help recapture a
portion or all of a defaulted loan made under the small
dollar loan program of such institution; and
``(C) may be used to designate and utilize a fiscal agent
for services normally provided by such an agent.
``(4) Technical assistance grants.--The Fund shall make
technical assistance grants to community development
financial institutions or any partnership between or among
such institutions to support and maintain a small dollar loan
program. Any grant amounts received under this paragraph may
be used for technology, staff support, and other costs
associated with establishing a small dollar loan program.
``(c) Definitions.--For purposes of this section--
``(1) the term `consumer reporting agency that compiles and
maintains files on consumers on a nationwide basis' has the
same meaning given such term in section 603(p) of the Fair
Credit Reporting Act (15 U.S.C. 1681a(p)); and
``(2) the term `small dollar loan program' means a loan
program wherein a community development financial institution
or any partnership between or among such institutions offers
loans to consumers that--
``(A) are made in amounts not exceeding $2,500;
``(B) must be repaid in installments;
``(C) have no pre-payment penalty;
``(D) the institution has to report payments regarding the
loan to at least 1 of the consumer reporting agencies that
compiles and maintains files on consumers on a nationwide
basis; and
``(E) meet any other affordability requirements as may be
established by the Administrator.''.

SEC. 1207. PROCEDURAL PROVISIONS.

An eligible entity desiring to participate in a program or
obtain a grant under this title shall submit an application
to the Secretary, in such form and containing such
information as the Secretary may require.

SEC. 1208. AUTHORIZATION OF APPROPRIATIONS.

(a) Authorization to the Secretary.--There are authorized
to be appropriated to the Secretary, such sums as are
necessary to both administer and fund the programs and
projects authorized by this title, to remain available until
expended.
(b) Authorization to the Fund.--There is authorized to be
appropriated to the Fund for each fiscal year beginning in
fiscal year 2010, an amount equal to the amount of the
administrative costs of the Fund for the operation of the
grant program established under this title.

SEC. 1209. REGULATIONS.

(a) In General.--The Secretary is authorized to promulgate
regulations to implement and administer the grant programs
and undertakings authorized by this title.
(b) Regulatory Authority.--Regulations prescribed under
this section may contain such classifications,
differentiations, or other provisions, and may provide for
such adjustments and exceptions for any class of grant
programs, undertakings, or eligible entities, as, in the
judgment of the Secretary, are necessary or proper to
effectuate the purposes of this title, to prevent
circumvention or evasion of this title, or to facilitate
compliance with this title.

SEC. 1210. EVALUATION AND REPORTS TO CONGRESS.

For each fiscal year in which a program or project is
carried out under this Title, the Secretary 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 containing a description of
the activities funded, amounts distributed, and measurable
results, as appropriate and available.
______