S.Amdt. 3969

SA 3969. Mr. LEVIN (for himself and Mr. Kaufman) 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:

On page 370, between lines 13 and 14, insert the following:

SEC. 333. FDIC EXAMINATION AUTHORITY.

(a) Examination Authority for Insurance and Orderly
Liquidation Purposes.--Section 10(b)(3) of the Federal
Deposit Insurance Act (12 U.S.C. 1820(b)(3)) is amended by
striking ``whenever the Board'' and all that follows through
the period at the end and inserting the following: ``or
depository institution holding company whenever the
Chairperson or the Board of Directors determines that a
special examination of any such depository institution or
depository institution holding company is necessary to
determine the condition of such depository institution or
depository institution holding company for insurance purposes
or for purposes of title II of the Restoring American
Financial Stability Act of 2010.''.
(b) Enforcement Authority.--Section 8(t) of the Federal
Deposit Insurance Act (12 U.S.C. 1818(t)) is amended--
(1) in paragraph (1)--
(A) by striking ``based on an examination of an insured
depository institution'' and inserting ``based on an
examination of an insured depository institution or
depository institution holding company''; and
(B) by striking ``with respect to any insured depository
institution or'' and inserting ``with respect to any insured
depository institution, depository institution holding
company, or'';
(2) in paragraph (2)--
(A) by striking ``Board of Directors determines, upon a
vote of its members,'' and inserting ``Board of Directors,
upon a vote of its members, or the Chairperson determines'';
(B) in subparagraph (B), by striking ``or'' at the end;
(C) in subparagraph (C), by striking the period at the end
and inserting ``; or''; and
(D) by adding at the end the following:
``(D) the conduct or threatened conduct (including any acts
or omissions) of the depository institution holding company
poses a risk to the Deposit Insurance Fund or of the exercise
of authority under title II of the Restoring American
Financial Stability Act of 2010, or may prejudice the
interests of the depositors of an affiliated institution.'';
(3) in paragraph (3)(A), by striking ``upon a vote of the
Board of Directors'' and inserting ``upon a determination by
the Chairperson or upon a vote of the Board of Directors'';
(4) in paragraph (4)(A)--
(A) by striking ``any insured depository institution'' and
inserting ``any insured depository institution, depository
institution holding company,''; and
(B) by striking ``the institution'' and inserting ``the
institution, holding company,'';

[[Page S3561]]

(5) in paragraph (4)(B), by striking ``the institution''
each place that term appears and inserting ``the institution,
holding company,''; and
(6) in paragraph (5)(A), by striking ``an insured
depository institution'' and inserting ``an insured
depository institution, depository institution holding
company,''.
(c) Back-up Examination Authority for Orderly Liquidation
Purposes.--The Federal Deposit Insurance Act (12 U.S.C. 1811
et seq.) is amended by adding at the end the following:

``SEC. 51. BACK-UP EXAMINATION AUTHORITY FOR ORDERLY
LIQUIDATION PURPOSES.

``The Corporation may conduct a special examination of a
nonbank financial company supervised by the Board of
Governors of the Federal Reserve System under section 113 of
the Restoring American Financial Stability Act of 2010, if
the Chairperson or the Board of Directors determines an
examination is necessary to determine the condition of the
company for purposes of title II of that Act.''.
(d) Access to Information for Insurance and Orderly
Liquidation Purposes.--The Federal Deposit Insurance Act is
amended by adding at the end the following:

``SEC. 52. ACCESS TO INFORMATION FOR INSURANCE AND ORDERLY
LIQUIDATION PURPOSES.

``(a) Access to Information.--The Corporation may, if the
Corporation determines that such action is necessary to carry
out its responsibilities relating to deposit insurance or
orderly liquidation under this Act, title II of the Restoring
American Financial Stability Act of 2010, or otherwise
applicable Federal law--
``(1) obtain information from an insured depository
institution, depository institution holding company, or
nonbank financial company supervised by the Board of
Governors of the Federal Reserve System under section 113 of
the Restoring American Financial Stability Act of 2010;
``(2) obtain information from the appropriate Federal
banking agency, or any regulator of a nonbank financial
company supervised by the Board of Governors of the Federal
Reserve System under section 113 of the Restoring American
Financial Stability Act of 2010, including examination
reports; and
``(3) participate in any examination, visitation, or risk-
scoping activity of an insured depository institution,
depository institution holding company, or nonbank financial
company supervised by the Board of Governors of the Federal
Reserve System under section 113 of the Restoring American
Financial Stability Act of 2010.
``(b) Enforcement.--The Corporation shall have the
authority to take any enforcement action under section 8
against any institution or company described in paragraph (1)
of subsection (a) that fails to provide any information
requested under that paragraph.
``(c) Use of Available Information.--The Corporation shall
use, in lieu of a request for information under subsection
(a), information provided to another Federal or State
regulatory agency, publicly available information, or
externally audited financial statements to the extent that
the Corporation determines such information is adequate to
the needs of the Corporation.''.

On page 1006, strike line 17 and all that follows through
page 1007, line 2, and insert the following:
(A) by striking paragraph (2) and inserting the following:
``(2) Standards and oversight.--The Commission shall set
standards and exercise oversight of the procedures and
methodologies, including qualitative and quantitative data
and models, used by nationally recognized statistical rating
organizations, to ensure that the credit ratings issued by
the nationally recognized statistical rating organizations
have a reasonable foundation in fact and analysis. 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

On page 1019, line 14, strike ``with respect to'' and all
that follows through ``organization'' on line 18 and insert
``to ensure that the qualitative and quantitative data and
models used by nationally recognized statistical rating
organizations produce credit ratings that have a reasonable
foundation in fact and analysis. The rules prescribed under
this subsection shall require each nationally recognized
statistical rating organization''.

On page 1020, line 25, strike ``and''.

On page 1021, line 15, strike the period at the end and
insert the following: ``; and
``(4) to assign relatively greater credit risk to a
financial product or transaction for which--
``(A) the rating organization lacks adequate historical
performance data;
``(B) the assets are provided by persons with a history of
providing poorly performing assets;
``(C) income from the assets will not be directly
contributed to the securitization, product, or transaction;
``(D) publicly available information, including trading
information, indicates that a prior rating misjudged the
credit risk of the product or transaction;
``(E) the product or transaction is of sufficient
complexity or novelty that the performance of the product or
transaction cannot be reliably evaluated; or
``(F) there is any other feature that the Commission may
specify.

On page 1023, line 5, strike ``(A)'' and insert the
following:
``(A) Basic information.--Each nationally recognized
statistical rating organization shall disclose at the
beginning of the form developed under paragraph (1) basic
information about each of the credit ratings that is the
subject of the disclosure, including--
``(i) the latest rating provided for the product or
transaction that is the subject of the disclosure;
``(ii) the date upon which the rating described in clause
(i) was issued;
``(iii) whether that rating described in clause (i) was
intended to be effective for less or more than 1 year after
the date of issuance of the rating;
``(iv) the type of asset to which the rating described in
clause (i) applies;
``(v) the history and date of any prior rating with respect
to the product or transaction during the 5-year period
preceding the date of the disclosure; and
``(vi) any other basic information, as the Commission may
require.
``(B)

On page 1025, line 19, strike ``(B)'' and insert ``(C)''.

On page 1028 between lines 4 and 5 insert the following:
``(E) No reliance on inadequate report.--A nationally
recognized statistical rating organization may not rely on a
third-party due diligence report if the nationally recognized
statistical rating organization has reason to believe that
the report is inadequate.

On page 1042, strike line 15 and all that follows through
page 1043, line 9, and insert the following:

SEC. 939B. ELIMINATING CONFLICTS OF INTEREST THROUGH
INTERMEDIATION.

(a) Intermediation Proposal.--Not later than 180 days after
the date of enactment of this Act, the Commission, through
the Office of Credit Ratings, shall issue a notice of
proposed rulemaking--
(1) to establish a system that--
(A) allows an intermediary to handle the fees provided by
issuers to obtain credit ratings from nationally recognized
statistical rating organizations, in order to avoid conflicts
of interest that arise when an issuer pays for a credit
rating with respect to a financial product or transaction
that the issuer plans to sell or execute; and
(B) enables such intermediary to receive fees from issuers,
direct fees to nationally recognized statistical rating
organizations, and create incentives to reward accurate
ratings; and
(2) that directs or facilitates the formation of, or
identifies, an intermediary to carry out the system described
in paragraph (1).

On page 1044, between lines 2 and 3, insert the following:

SEC. 939D. STRENGTHENING THE ENFORCEMENT AUTHORITY OF THE
COMMISSION OVER NATIONALLY RECOGNIZED
STATISTICAL RATING ORGANIZATIONS.

(a) Requirement to File Applications and Reports With
Commission.--Section 15E of the Securities Exchange Act of
1934 (15 U.S.C. 78o-7) is amended--
(1) in subsection (a)--
(A) in paragraph (1)(A), by striking ``furnish to'' and
inserting ``file with''; and
(B) in paragraph (2), by striking ``furnished to'' each
place that term appears and inserting ``filed with'';
(2) in subsection (b)--
(A) in paragraph (1)(A), by striking ``furnished'' and
inserting ``filed'';
(B) in paragraph (2), in the matter preceding subparagraph
(A), by striking ``furnish to'' and inserting ``file with'';
and
(C) by striking ``furnishing'' each place that term appears
and inserting ``filing'';
(3) in subsection (d)(1), as so redesignated by this Act--
(A) in subparagraph (B), by striking ``furnished to'' and
inserting ``filed with''; and
(B) in subparagraph (D), by striking ``furnish'' and
inserting ``file'';
(4) in subsection (e)(1), by striking ``furnishing a
written notice of withdrawal to the Commission'' and
inserting ``filing a written notice of withdrawal with the
Commission'';
(5) in subsection (k), by striking ``furnish to'' and
inserting ``file with'';
(6) in subsection (l)(2)(A)(i), by striking ``furnished''
and inserting ``filed''; and
(7) in subsection (m)(2), by striking ``furnished'' and
inserting ``filed''.
(b) Authority to Sanction Associated Persons.--Section
15E(d)(1) of the Securities Exchange Act of 1934 (15 U.S.C.
78o-7), as amended by this Act, is amended--
(1) by inserting after ``or revoke the registration of any
nationally recognized statistical rating organization'' the
following: ``, or take enforcement action against or sanction
any person who is or was associated, or is or was seeking to
become associated, with a nationally recognized statistical
rating organization,''; and
(2) by inserting ``bar,'' after ``placing of limitations,
suspension,''.

On page 1047, strike lines 3 through 15 and insert the
following:
``(B) require a securitizer to retain an economic
interest--
``(i) of not less than 5 percent of the credit risk
associated with a pool of assets used to create a series of
asset-backed securities, and ensure that such economic
interest is applied to multiple credit tranches derived from
the pool of assets in a manner reasonably designed to ensure
that the securitizer retains an economic interest in the
success

[[Page S3562]]

of each class of securities resulting from the securitization
of the asset pool; or
``(ii) of less than 5 percent of the credit risk associated
with a pool of assets used to create a series of asset-backed
securities, if and only if each of the assets in the pool
pose a low credit risk, the originator meets the underwriting
standards prescribed under paragraph (2)(B), and the
securitizer conducts a due diligence review reasonably
designed to ensure the assets and originator meet the
requirements of this paragraph;

On page 1056, line 17, strike the second period and insert
the following: ``.

SEC. 946. RESTRICTION ON SYNTHETIC ASSET-BACKED SECURITIES.

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

``SEC. 15H. RESTRICTION ON SYNTHETIC ASSET-BACKED SECURITIES.

``(a) Definition.--For purposes of this section, the term
`synthetic asset-backed security' means an asset-backed
security with respect to which, by design, the self-
liquidating financial assets referenced in the synthetic
securitization do not provide any direct payment or cash flow
to the holder of the security.
``(b) Restriction.--
``(1) In general.--No issuer, underwriter, placement agent,
sponsor, or initial purchaser may offer, sell, or transfer a
synthetic asset-backed security that has no substantial or
material economic purpose apart from speculation on a
possible future gain or loss associated with the value or
condition of the referenced assets. The Commission may
determine whether a synthetic asset-backed security meets the
requirements of this section. A determination by the
Commission under the preceding sentence is not subject to
judicial review.
``(2) Rulemaking.--Not later than 180 days after the date
of enactment of this section, the Commission shall issue
rules to carry out this section and to prevent evasions
thereof.''.

At the end of the bill, add the following:

SEC. 1221. MORTGAGE STANDARDS.

(a) Prohibition on Stated Income and Negatively Amortizing
Mortgages.--Section 129 of the Truth in Lending Act (15
U.S.C. 1639) is amended by adding at the end following:
``(n) Prohibition on Stated Income and Negatively
Amortizing Mortgages.--
``(1) In general.--Any person who sells, transfers, or
plans to sell or transfer at least 1,000 mortgages, mortgage-
backed securities, or similar financial instruments within a
calendar year shall not include or reference in any of such
financial instruments any mortgage in which the borrower's
income was not verified or in which the loan balance may
negatively amortize.
``(2) Joint rulemaking.--The Chairman of the Board, the
Chairperson of the Federal Deposit Insurance Corporation, and
the Director of the Bureau of Consumer Financial Protection
may issue joint rules to carry out the purposes of this
subsection. Rules issued under this paragraph may--
``(A) specify what documentation may be used to verify the
income of a borrower under paragraph (1), including tax
information, asset statements, prior loan repayment
information, or any other documentation that the Chairmen and
the Director jointly deem necessary and appropriate; and
``(B) define `negatively amortize', including by making an
exception for home equity conversion mortgages, as defined
under section 255 of the National Housing Act (commonly
referred to as `reverse mortgages') that are otherwise
regulated by a Federal or State agency.
``(3) Rule of construction.--As used in this section, the
term `mortgage' shall not be construed to be restricted or
limited only to mortgages referred to in section 103(aa).''.
(b) Effective Date.--The requirements under subsection
(n)(1) of section 129 of the Truth in Lending Act (as added
by subsection (a)) shall take effect not later than 180 days
after the date of the enactment of this Act, whether or not
any rulemaking under subsection (n)(2) of such Act has been
initiated or completed.

SEC. 1222. GUSTAFSON FIX.

(a) Definition of Prospectus.--Section 2(a)(10) of the
Securities Act of 1933 (15 U.S.C. 77b(a)(10)) is amended--
(1) by inserting before ``except that'' the following:
``(whether or not such security is offered or sold pursuant
to a registration statement or the security or the
transaction is exempt from this title or from section 5 of
this title pursuant to the provisions of sections 3 or 4)'';
and
(2) by striking ``at the time of such'' and inserting ``at
the time such''.
(b) Civil Liabilities.--Section 12(a)(2) of the Securities
Act of 1933 (15 U.S.C. 77l(a)(2)) is amended by inserting
``(as defined in section 2(a)(10) of this title)'' after
``prospectus''.

SEC. 1223. COOLING OFF PERIOD.

Section 207 of title 18, United States Code, is amended by
adding at the end the following:
``(m) One-year Restriction on Federal Financial
Regulators.--
``(1) In general.--In addition to the restrictions set
forth in subsections (a) and (b), any person who--
``(A) was an officer or employee (including any special
Government employee) of a covered Federal agency;
``(B) served 2 or more months during the final 12 months of
the employment of the person with the covered Federal agency
participating personally and substantially on behalf of the
covered Federal agency in the regulation or oversight of, or
in an enforcement action against, a particular financial
institution or holding company; and
``(C) within 1 year after the completion date of the
service or employment of the person with the covered Federal
agency, knowingly accepts compensation as an employee,
officer, director, or consultant from--
``(i) the financial institution described in subparagraph
(B), any holding company that controls the financial
institution, or any other company that controls the financial
institution; or
``(ii) the holding company described in subparagraph (B),
or any other financial institution that is controlled by such
holding company,
shall be punished as provided in section 216 of this title.
``(2) Definitions.--For purposes of this subsection--
``(A) the term `covered Federal agency' means the Office of
the Comptroller of the Currency, the Federal Deposit
Insurance Corporation, the Board of Governors of the Federal
Reserve System, each Federal Reserve Bank, the National
Credit Union Administration, the Financial Stability
Oversight Council, the Securities and Exchange Commission,
the Commodities Futures Trading Commission, the Bureau of
Consumer Financial Protection, and the Public Company
Accounting Oversight Board;
``(B) the term `financial institution' means any business
or holding company that is registered with or regulated by a
covered Federal agency, including any foreign financial
institution or holding company that has a physical location
in any State and is registered with or regulated by a covered
Federal agency; and
``(C) the term `consultant' means a person who works
personally and substantially on matters for, or on behalf of,
a financial institution or holding company.
``(3) Regulations.--
``(A) In general.--Each covered Federal agency may
prescribe rules or guidance to administer and carry out this
section, including to define the scope of persons referred to
in paragraphs (1) and (2)(C), and the financial institutions
and holding companies referred to in paragraph (2)(B).
``(B) Consultation.--A covered Federal agency may consult
with other covered Federal agencies for the purpose of
ensuring that the rules and guidance issued by the agencies
under subparagraph (A) are, to the extent possible,
consistent, comparable, and practicable, taking into account
any differences in the regulatory and oversight programs used
by the covered Federal agencies for the supervision of
financial institutions and holding companies.
``(4) Waiver.--A Federal agency may grant a waiver, on a
case by case basis, of the restriction imposed by this
subsection to any officer or employee (including any special
Government employee) of the covered Federal agency, if the
head of the covered Federal agency, or the chairman of its
board of directors, certifies in writing that granting the
waiver would not impair the integrity of the regulatory and
oversight efforts of the covered Federal agency.
``(5) Penalties.--In addition to any other administrative,
civil, or criminal remedy or penalty that may otherwise
apply, whenever a Federal agency determines that a person
subject to paragraph (1) has become associated, in the manner
described in paragraph (1)(C), with a financial institution,
holding company, or other company in violation of this
section, the agency shall impose upon such person one or more
of the following penalties:
``(A) Industry-wide prohibition order.--The Federal agency
may, subject to notice and an administrative hearing, issue
an order--
``(i) to remove such person from office or to prohibit such
person from further participation in the conduct of the
affairs of the financial institution, holding company, or
other company for a period of up to 5 years; and
``(ii) to prohibit any further participation by such
person, in any manner, in the conduct of the affairs of any
financial institution or holding company subject to
regulation or oversight by the agency for a period of up to 5
years.
``(B) Civil monetary penalty.--The Federal agency may, in
an administrative proceeding or civil action in an
appropriate United States district court, impose upon such
person a civil monetary penalty of not more than $250,000. In
lieu of an action by the Federal agency under this
subparagraph, the Attorney General of the United States may
bring a civil action under this subparagraph in the
appropriate United States district court.''.

SEC. 1224. FOREIGN BANK ANTI-TAX EVASION FIX.

Section 5318A of title 31, United States Code, is amended--
(1) by striking the section heading and inserting the
following:

``Sec. 5318A. Special measures for jurisdictions, financial
institutions, or international transactions that are of
primary money laundering concern or impede United States
tax enforcement'';

(2) in subsection (a), by striking the subsection heading
and inserting the following:
``(a) Special Measures To Counter Money Laundering and
Efforts To Impede United States Tax Enforcement.--'';

[[Page S3563]]

(3) in subsection (c), by striking the subsection heading
and inserting the following:
``(c) Consultations and Information To Be Considered in
Finding Jurisdictions, Institutions, Types of Accounts, or
Transactions To Be of Primary Money Laundering Concern or To
Be Impeding United States Tax Enforcement.--'';
(4) in subsection (a)(1), by inserting ``or is impeding
United States tax enforcement'' after ``primary money
laundering concern'';
(5) in subsection (a)(4)--
(A) in subparagraph (A)--
(i) by inserting ``in matters involving money laundering,''
before ``shall consult''; and
(ii) by striking ``and'' at the end;
(B) by redesignating subparagraph (B) as subparagraph (C);
and
(C) by inserting after subparagraph (A) the following:
``(B) in matters involving United States tax enforcement,
shall consult with the Commissioner of Internal Revenue, the
Secretary of State, the Attorney General of the United
States, and in the sole discretion of the Secretary, such
other agencies and interested parties as the Secretary may
find to be appropriate; and'';
(6) in each of paragraphs (1)(A), (2), (3), and (4) of
subsection (b), by inserting ``or to be impeding United
States tax enforcement'' after ``primary money laundering
concern'' each place that term appears;
(7) in subsection (b), by striking paragraph (5) and
inserting the following:
``(5) Prohibitions or conditions on opening or maintaining
certain correspondent or payable-through accounts or
authorizing certain payment cards.--If the Secretary finds a
jurisdiction outside of the United States, 1 or more
financial institutions operating outside of the United
States, or 1 or more classes of transactions within or
involving a jurisdiction outside of the United States to be
of primary money laundering concern or to be impeding United
States tax enforcement, the Secretary, in consultation with
the Secretary of State, the Attorney General of the United
States, and the Chairman of the Board of Governors of the
Federal Reserve System, may prohibit, or impose conditions
upon--
``(A) the opening or maintaining in the United States of a
correspondent account or payable-through account; or
``(B) the authorization, approval, or use in the United
States of a credit card, charge card, debit card, or similar
credit or debit financial instrument by any domestic
financial institution, financial agency, or credit card
company or association, for or on behalf of a foreign banking
institution, if such correspondent account, payable-through
account, credit card, charge card, debit card, or similar
credit or debit financial instrument, involves any such
jurisdiction or institution, or if any such transaction may
be conducted through such correspondent account, payable-
through account, credit card, charge card, debit card, or
similar credit or debit financial instrument.''; and
(8) in subsection (c)(1), by inserting ``or is impeding
United States tax enforcement'' after ``primary money
laundering concern'';
(9) in subsection (c)(2)(A)--
(A) in clause (ii), by striking ``bank secrecy or special
regulatory advantages'' and inserting ``bank, tax, corporate,
trust, or financial secrecy or regulatory advantages'';
(B) in clause (iii), by striking ``supervisory and counter-
money'' and inserting ``supervisory, international tax
enforcement, and counter-money'';
(C) in clause (v), by striking ``banking or secrecy'' and
inserting ``banking, tax, or secrecy''; and
(D) in clause (vi), by inserting ``, tax treaty, or tax
information exchange agreement'' after ``treaty'';
(10) in subsection (c)(2)(B)--
(A) in clause (i), by inserting ``or tax evasion'' after
``money laundering''; and
(B) in clause (iii), by inserting ``, tax evasion,'' after
``money laundering''; and
(11) in subsection (d), by inserting ``involving money
laundering, and shall notify, in writing, the Committee on
Finance of the Senate and the Committee on Ways and Means of
the House of Representatives of any such action involving
United States tax enforcement'' after ``such action''.
______