S.Amdt. 3825

SA 3825. Mr. SHELBY submitted an amendment intended to be proposed to
amendment SA 3739 proposed by Mr. Reid (for Mr. Dodd (for himself and
Mrs. Lincoln)) 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; which was ordered
to lie on the table; as follows:

Strike title I and insert the following:

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--

[[Page S3209]]

(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 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
regulated by the Board of Governors 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 such 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.

[[Page S3210]]

(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.
(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

[[Page S3211]]

United States that could arise from the material financial
distress or failure of large, interconnected financial
institutions, the Council may make recommendations to the
Board of Governors concerning the establishment and
refinement of prudential standards and reporting and
disclosure requirements applicable to nonbank financial
companies supervised by the Board of Governors and large,
interconnected bank holding companies, that--
(A) are more stringent than those applicable to other
nonbank financial companies and bank holding companies that
do not present similar risks to the financial stability of
the United States; and
(B) increase in stringency, based on the considerations
identified in subsection (b)(3).
(2) Limitation on bank holding companies.--Any standards
recommended under subsections (b) through (f) shall not apply
to any bank holding company with total consolidated assets of
less than $50,000,000,000. The Council may recommend an asset
threshold greater than $50,000,000,000 for the applicability
of any particular standard under those subsections.
(b) Development of Prudential Standards.--
(1) In general.--The recommendations of the Council under
subsection (a) may include--
(A) risk-based capital requirements;
(B) leverage limits;
(C) liquidity requirements;
(D) resolution plan and credit exposure report
requirements;
(E) concentration limits;
(F) a contingent capital requirement;
(G) enhanced public disclosures; and
(H) overall risk management requirements.
(2) Prudential standards for foreign financial companies.--
In making recommendations concerning the standards set forth
in paragraph (1) that would apply to foreign nonbank
financial companies supervised by the Board of Governors or
foreign-based bank holding companies, the Council shall give
due regard to the principle of national treatment and
competitive equity.
(3) Considerations.--In making recommendations concerning
prudential standards under paragraph (1), the Council shall--
(A) take into account differences among nonbank financial
companies supervised by the Board of Governors and bank
holding companies described in subsection (a), based on--
(i) the factors described in subsections (a) and (b) of
section 113;
(ii) whether the company owns an insured depository
institution;
(iii) nonfinancial activities and affiliations of the
company; and
(iv) any other factors that the Council determines
appropriate; and
(B) to the extent possible, ensure that small changes in
the factors listed in subsections (a) and (b) of section 113
would not result in sharp, discontinuous changes in the
prudential standards established under paragraph (1).
(c) Contingent Capital.--
(1) Study required.--The Council shall conduct a study of
the feasibility, benefits, costs, and structure of a
contingent capital requirement for nonbank financial
companies supervised by the Board of Governors and bank
holding companies described in subsection (a), which study
shall include--
(A) an evaluation of the degree to which such requirement
would enhance the safety and soundness of companies subject
to the requirement, promote the financial stability of the
United States, and reduce risks to United States taxpayers;
(B) an evaluation of the characteristics and amounts of
convertible debt that should be required;
(C) an analysis of potential prudential standards that
should be used to determine whether the contingent capital of
a company would be converted to equity in times of financial
stress;
(D) an evaluation of the costs to companies, the effects on
the structure and operation of credit and other financial
markets, and other economic effects of requiring contingent
capital;
(E) an evaluation of the effects of such requirement on the
international competitiveness of companies subject to the
requirement and the prospects for international coordination
in establishing such requirement; and
(F) recommendations for implementing regulations.
(2) Report.--The Council shall submit a report to Congress
regarding the study required by paragraph (1) not later than
2 years after the date of enactment of this Act.
(3) Recommendations.--
(A) In general.--Subsequent to submitting a report to
Congress under paragraph (2), the Council may make
recommendations to the Board of Governors to require any
nonbank financial company supervised by the Board of
Governors and any bank holding company described in
subsection (a) to maintain a minimum amount of long-term
hybrid debt that is convertible to equity in times of
financial stress.
(B) Factors to consider.--In making recommendations under
this subsection, the Council shall consider--
(i) an appropriate transition period for implementation of
a conversion under this subsection;
(ii) the factors described in subsection (b)(3);
(iii) capital requirements applicable to a nonbank
financial company supervised by the Board of Governors or a
bank holding company described in subsection (a), and
subsidiaries thereof;
(iv) results of the study required by paragraph (1); and
(v) any other factor that the Council deems appropriate.
(d) Resolution Plan and Credit Exposure Reports.--
(1) Resolution plan.--The Council may make recommendations
to the Board of Governors concerning the requirement that
each nonbank financial company supervised by the Board of
Governors and each bank holding company described in
subsection (a) report periodically to the Council, the Board
of Governors, and the Corporation, the plan of such company
for rapid and orderly resolution in the event of material
financial distress or failure.
(2) Credit exposure report.--The Council may make
recommendations to the Board of Governors concerning the
advisability of requiring each nonbank financial company
supervised by the Board of Governors and bank holding company
described in subsection (a) to report periodically to the
Council, the Board of Governors, and the Corporation on--
(A) the nature and extent to which the company has credit
exposure to other significant nonbank financial companies and
significant bank holding companies; and
(B) the nature and extent to which other such significant
nonbank financial companies and significant bank holding
companies have credit exposure to that company.
(e) Concentration Limits.--In order to limit the risks that
the failure of any individual company could pose to nonbank
financial companies supervised by the Board of Governors or
bank holding companies described in subsection (a), the
Council may make recommendations to the Board of Governors to
prescribe standards to limit such risks, as set forth in
section 165.
(f) Enhanced Public Disclosures.--The Council may make
recommendations to the Board of Governors to require periodic
public disclosures by bank holding companies described in
subsection (a) and by nonbank financial companies supervised
by the Board of Governors, in order to support market
evaluation of the risk profile, capital adequacy, and risk
management capabilities thereof.

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

[[Page S3212]]

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 and the Office of Financial
Research shall be treated as expenses of, and paid by, the
Department of the Treasury.

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.
(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

[[Page S3213]]

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 ``Research and Analysis Center'' means the
research and analysis center established under section 154;
(4) 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;
(5) 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;
(6) 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
(7) 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, with the approval of the
Chairperson, shall establish the annual budget of the Office.
(d) Office Personnel.--
(1) In general.--The Director, with approval of 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.
(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) Non-Compete.--The Director and any staff of the Office
who has had access to the transaction or position data 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.
(g) 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 share data
and information, including software developed by the Office,
with the Council and member agencies, which shared data,
information, and software--
(1) shall be maintained with at least the same level of
security as is used by the Office; and
(2) may not be shared with any individual or entity.
(c) Guidance.--
(1) Scope.--The Office, in consultation with the
Chairperson, shall issue guidance 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 work to standardize the types and formats
of data reported and collected on behalf of the Council, as
described in subsection (a)(2).
(d) Testimony.--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.
(e) Additional Reports.--The Director may, with the
approval of the Chairperson, provide additional reports to
Congress concerning the financial stability of the United
States.

SEC. 154. ORGANIZATIONAL STRUCTURE; RESPONSIBILITIES OF
RESEARCH AND ANALYSIS CENTER.

(a) In General.--There is established within the Office, to
carry out the programmatic responsibilities of the Office,
the Research and Analysis Center.
(b) Research and Analysis Center.--The Research and
Analysis Center, on behalf of the Council, shall develop and
maintain independent analytical capabilities and computing
resources to develop and maintain metrics and reporting
systems for risks to the financial stability of the United
States.
(c) 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. 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;

[[Page S3214]]

(iii) leadership development and succession planning; and
(iv) effective use of technology by employees.
(B) 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) 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.--
(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

[[Page S3215]]

any bank holding company with total consolidated assets of
less than $50,000,000,000, but the Board of Governors may
establish an asset threshold greater than $50,000,000,000 for
the applicability of any particular standard under
subsections (b) through (f).
(b) Development of Prudential Standards.--
(1) In general.--
(A) Required standards.--The Board of Governors shall, by
regulation or order, establish prudential standards for
nonbank financial companies supervised by the Board of
Governors and bank holding companies described in subsection
(a), that shall include--
(i) risk-based capital requirements;
(ii) leverage limits;
(iii) liquidity requirements;
(iv) resolution plan and credit exposure report
requirements; and
(v) concentration limits.
(B) Additional standards authorized.--The Board of
Governors may, by regulation or order, establish prudential
standards for nonbank financial companies supervised by the
Board of Governors and bank holding companies described in
subsection (a), that include--
(i) a contingent capital requirement;
(ii) enhanced public disclosures; and
(iii) overall risk management requirements.
(2) Prudential standards for foreign financial companies.--
In applying the standards set forth in paragraph (1) to
foreign nonbank financial companies supervised by the Board
of Governors and to foreign-based bank holding companies, the
Board of Governors shall give due regard to the principle of
national treatment and competitive equity.
(3) Considerations.--In prescribing prudential standards
under paragraph (1), the Board of Governors shall--
(A) take into account differences among nonbank financial
companies supervised by the Board of Governors and bank
holding companies described in subsection (a), based on--
(i) the factors described in subsections (a) and (b) of
section 113;
(ii) whether the company owns an insured depository
institution;
(iii) nonfinancial activities and affiliations of the
company; and
(iv) any other factors that the Board of Governors
determines appropriate;
(B) to the extent possible, ensure that small changes in
the factors listed in subsections (a) and (b) of section 113
would not result in sharp, discontinuous changes in the
prudential standards established under paragraph (1) of this
subsection; and
(C) take into account any recommendations of the Council
under section 115.
(4) Report.--The Board of Governors shall submit an annual
report to Congress regarding the implementation of the
prudential standards required pursuant to paragraph (1),
including the use of such standards to mitigate risks to the
financial stability of the United States.
(c) Contingent Capital.--
(1) In general.--Subsequent to submission by the Council of
a report to Congress under section 115(c), the Board of
Governors may promulgate regulations that require each
nonbank financial company supervised by the Board of
Governors and bank holding companies described in subsection
(a) to maintain a minimum amount of long-term hybrid debt
that is convertible to equity in times of financial stress.
(2) Factors to consider.--In establishing regulations under
this subsection, the Board of Governors shall consider--
(A) the results of the study undertaken by the Council, and
any recommendations of the Council, under section 115(c);
(B) an appropriate transition period for implementation of
a conversion under this subsection;
(C) the factors described in subsection (b)(3)(A);
(D) capital requirements applicable to the nonbank
financial company supervised by the Board of Governors or a
bank holding company described in subsection (a), and
subsidiaries thereof; and
(E) any other factor that the Board of Governors deems
appropriate.
(d) Resolution Plan and Credit Exposure Reports.--
(1) Resolution plan.--The Board of Governors shall require
each nonbank financial company supervised by the Board of
Governors and bank holding companies described in subsection
(a) to report periodically to the Board of Governors, the
Council, and the Corporation the plan of such company for
rapid and orderly resolution in the event of material
financial distress or failure.
(2) Credit exposure report.--The Board of Governors shall
require each nonbank financial company supervised by the
Board of Governors and bank holding companies described in
subsection (a) to report periodically to the Board of
Governors, the Council, and the Corporation on--
(A) the nature and extent to which the company has credit
exposure to other significant nonbank financial companies and
significant bank holding companies; and
(B) the nature and extent to which other significant
nonbank financial companies and significant bank holding
companies have credit exposure to that company.
(3) Review.--The Board of Governors and the Corporation
shall review the information provided in accordance with this
section by each nonbank financial company supervised by the
Board of Governors and bank holding company described in
subsection (a).
(4) Notice of deficiencies.--If the Board of Governors and
the Corporation jointly determine, based on their review
under paragraph (3), that the resolution plan of a nonbank
financial company supervised by the Board of Governors or a
bank holding company described in subsection (a) is not
credible or would not facilitate an orderly resolution of the
company under title 11, United States Code--
(A) the Board of Governors and the Corporation shall notify
the company, as applicable, of the deficiencies in the
resolution plan; and
(B) the company shall resubmit the resolution plan within a
time frame determined by the Board of Governors and the
Corporation, with revisions demonstrating that the plan is
credible and would result in an orderly resolution under
title 11, United States Code, including any proposed changes
in business operations and corporate structure to facilitate
implementation of the plan.
(5) Failure to resubmit credible plan.--
(A) In general.--If a nonbank financial company supervised
by the Board of Governors or a bank holding company described
in subsection (a) fails to timely resubmit the resolution
plan as required under paragraph (4), with such revisions as
are required under subparagraph (B), the Board of Governors
and the Corporation may jointly impose more stringent
capital, leverage, or liquidity requirements, or restrictions
on the growth, activities, or operations of the company, or
any subsidiary thereof, until such time as the company
resubmits a plan that remedies the deficiencies.
(B) Divestiture.--The Board of Governors and the
Corporation, in consultation with the Council, may direct a
nonbank financial company supervised by the Board of
Governors or a bank holding company described in subsection
(a), by order, to divest certain assets or operations
identified by the Board of Governors and the Corporation, to
facilitate an orderly resolution of such company under title
11, United States Code, in the event of the failure of such
company, in any case in which--
(i) the Board of Governors and the Corporation have jointly
imposed more stringent requirements on the company pursuant
to subparagraph (A); and
(ii) the company has failed, within the 2-year period
beginning on the date of the imposition of such requirements
under subparagraph (A), to resubmit the resolution plan with
such revisions as were required under paragraph (4)(B).
(6) Rules.--Not later than 18 months after the date of
enactment of this Act, the Board of Governors and the
Corporation shall jointly issue final rules implementing this
subsection.
(e) Concentration Limits.--
(1) Standards.--In order to limit the risks that the
failure of any individual company could pose to a nonbank
financial company supervised by the Board of Governors or a
bank holding company described in subsection (a), the Board
of Governors, by regulation, shall prescribe standards that
limit such risks.
(2) Limitation on credit exposure.--The regulations
prescribed by the Board of Governors under paragraph (1)
shall prohibit each nonbank financial company supervised by
the Board of Governors and bank holding company described in
subsection (a) from having credit exposure to any
unaffiliated company that exceeds 25 percent of the capital
stock and surplus (or such lower amount as the Board of
Governors may determine by regulation to be necessary to
mitigate risks to the financial stability of the United
States) of the company.
(3) Credit exposure.--For purposes of paragraph (2),
``credit exposure'' to a company means--
(A) all extensions of credit to the company, including
loans, deposits, and lines of credit;
(B) all repurchase agreements and reverse repurchase
agreements with the company;
(C) all securities borrowing and lending transactions with
the company, to the extent that such transactions create
credit exposure for the nonbank financial company supervised
by the Board of Governors or a bank holding company described
in subsection (a);
(D) all guarantees, acceptances, or letters of credit
(including endorsement or standby letters of credit) issued
on behalf of the company;
(E) all purchases of or investment in securities issued by
the company;
(F) counterparty credit exposure to the company in
connection with a derivative transaction between the nonbank
financial company supervised by the Board of Governors or a
bank holding company described in subsection (a) and the
company; and
(G) any other similar transactions that the Board of
Governors, by regulation, determines to be a credit exposure
for purposes of this section.
(4) Attribution rule.--For purposes of this subsection, any
transaction by a nonbank financial company supervised by the
Board of Governors or a bank holding company described in
subsection (a) with any person is a transaction with a
company, to the extent that the proceeds of the transaction
are used for the benefit of, or transferred to, that company.

[[Page S3216]]

(5) Rulemaking.--The Board of Governors may issue such
regulations and orders, including definitions consistent with
this section, as may be necessary to administer and carry out
this subsection.
(6) Exemptions.--The Board of Governors may, by regulation
or order, exempt transactions, in whole or in part, from the
definition of ``credit exposure'' for purposes of this
subsection, if the Board of Governors finds that the
exemption is in the public interest and is consistent with
the purpose of this subsection.
(7) Transition period.--
(A) In general.--This subsection and any regulations and
orders of the Board of Governors under this subsection shall
not be effective until 3 years after the date of enactment of
this Act.
(B) Extension authorized.--The Board of Governors may
extend the period specified in subparagraph (A) for not
longer than an additional 2 years.
(f) Enhanced Public Disclosures.--The Board of Governors
may prescribe, by regulation, periodic public disclosures by
nonbank financial companies supervised by the Board of
Governors and bank holding companies described in subsection
(a) in order to support market evaluation of the risk
profile, capital adequacy, and risk management capabilities
thereof.
(g) Risk Committee.--
(1) Nonbank financial companies supervised by the board of
governors.--The Board of Governors shall require each nonbank
financial company supervised by the Board of Governors that
is a publicly traded company to establish a risk committee,
as set forth in paragraph (3), not later than 1 year after
the date of receipt of a notice of final determination under
section 113(d)(3) with respect to such nonbank financial
company supervised by the Board of Governors.
(2) Certain bank holding companies.--
(A) Mandatory regulations.--The Board of Governors shall
issue regulations requiring each bank holding company that is
a publicly traded company and that has total consolidated
assets of not less than $10,000,000,000 to establish a risk
committee, as set forth in paragraph (3).
(B) Permissive regulations.--The Board of Governors may
require each bank holding company that is a publicly traded
company and that has total consolidated assets of less than
$10,000,000,000 to establish a risk committee, as set forth
in paragraph (3), as determined necessary or appropriate by
the Board of Governors to promote sound risk management
practices.
(3) Risk committee.--A risk committee required by this
subsection shall--
(A) be responsible for the oversight of the enterprise-wide
risk management practices of the nonbank financial company
supervised by the Board of Governors or bank holding company
described in subsection (a), as applicable;
(B) include such number of independent directors as the
Board of Governors may determine appropriate, based on the
nature of operations, size of assets, and other appropriate
criteria related to the nonbank financial company supervised
by the Board of Governors or a bank holding company described
in subsection (a), as applicable; and
(C) include at least 1 risk management expert having
experience in identifying, assessing, and managing risk
exposures of large, complex firms.
(4) Rulemaking.--The Board of Governors shall issue final
rules to carry out this subsection, not later than 1 year
after the transfer date, to take effect not later than 15
months after the transfer date.
(h) Stress Tests.--The Board of Governors shall conduct
analyses in which nonbank financial companies supervised by
the Board of Governors and bank holding companies described
in subsection (a) are subject to evaluation of whether the
companies have the capital, on a total consolidated basis,
necessary to absorb losses as a result of adverse economic
conditions. The Board of Governors may develop and apply such
other analytic techniques as are necessary to identify,
measure, and monitor risks to the financial stability of the
United States.

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

[[Page S3217]]

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.
______