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O:\AYO\AYO10732.xml [file 1 of 22] S.L.C. Calendar N l o. 11TH CONGRESS 2DSESSION S.ll [Report No. 111–lll] To promote the financial stability of the United States by improving account- ability 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 pur- poses. IN THE SENATE OF THE UNITED STATES llllllllll Mr. OD, from the Committee on Banking, Housing, and Urban Affairs, re- calendarhe following original bill; which was read twice and placed on the A BILL To promote the financial stability of the United States by improving accountability and transparency in the finan- cial system, to end ‘‘too big to fail’’, to protect the American taxpayer by ending bailouts, to protect con- sumers from abusive financial services practices, and for other purposes. 1 Be it enacted by the Senate and House of Representa- 2 tives of the United States of America in Congress assembled, O:\AYO\AYO10732.xml [file 1 of 22] S.L.C. 2 1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 2 (a) S HORT T ITLE .—This Act may be cited as the 3 ‘‘Restoring American Financial Stability Act of 2010’’. 4 (b) T ABLE OF C ONTENTS .—The table of contents for 5 this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Definitions. Sec. 3. Severability. Sec. 4. Effective date. TITLE I—FINANCIAL STABILITY Sec. 101. Short title. Sec. 102. Definitions. Subtitle A—Financial Stability Oversight Council Sec. 111. Financial Stability Oversight Council established. Sec. 112. Council authority. Sec. 113. Authority to require supervision and regulation of certain nonbank fi- nancial companies. Sec. 114. Registration of nonbank financial companies supervised by the Board of Governors. Sec. 115. Enhanced supervision and prudential standards for nonbank financial companies supervised by the Board of Governors and certain bank holding companies. Sec. 116. Reports. Sec. 117. Treatment of certain companies that cease to be bank holding compa- nies. Sec. 118. Council funding. Sec. 119. Resolution of supervisory jurisdictional disputes among member agen- cies. Sec. 120. Additional standards applicable to activities or practices for financial stability purposes. Sec. 121. Mitigation of risks to financial stability. Subtitle B—Office of Financial Research Sec. 151. Definitions. Sec. 152. Office of Financial Research established. Sec. 153. Purpose and duties of the Office. Sec. 154. Organizational structure; responsibilities of primary programmatic units. Sec. 155. Funding. Sec. 156. Transition oversight. Subtitle C—Additional Board of Governors Authority for Certain Nonbank Financial Companies and Bank Holding Companies Sec. 161. Reports by and examinations of nonbank financial companies super- vised by the Board of Governors. O:\AYO\AYO10732.xml [file 1 of 22] S.L.C. 3 Sec. 162. Enforcement. Sec. 163. Acquisitions. Sec. 164. Prohibition against management interlocks between certain financial companies. Sec. 165. Enhanced supervision and prudential standards for nonbank financial companies supervised by the Board of Governors and certain bank holding companies. Sec. 166. Early remediation requirements. Sec. 167. Affiliations. Sec. 168. Regulations. Sec. 169. Avoiding duplication. Sec. 170. Safe harbor. TITLE II—ORDERLY LIQUIDATION AUTHORITY Sec. 201. Definitions. Sec. 202. Orderly Liquidation Authority Panel. Sec. 203. Systemic risk determination. Sec. 204. Orderly liquidation. Sec. 205. Orderly liquidation of covered brokers and dealers. Sec. 206. Mandatory terms and conditions for all orderly liquidation actions. Sec. 207. Directors not liable for acquiescing in appointment of receiver. Sec. 208. Dismissal and exclusion of other actions. Sec. 209. Rulemaking; non-conflicting law. Sec. 210. Powers and duties of the corporation. Sec. 211. Miscellaneous provisions. TITLE III—TRANSFER OF POWERS TO THE COMPTROLLER OF THE CURRENCY, THE CORPORATION, AND THE BOARD OF GOV- ERNORS Sec. 300. Short title. Sec. 301. Purposes. Sec. 302. Definition. Subtitle A—Transfer of Powers and Duties Sec. 311. Transfer date. Sec. 312. Powers and duties transferred. Sec. 313. Abolishment. Sec. 314. Amendments to the Revised Statutes. Sec. 315. Federal information policy. Sec. 316. Savings provisions. Sec. 317. References in Federal law to Federal banking agencies. Sec. 318. Funding. Sec. 319. Contracting and leasing authority. Subtitle B—Transitional Provisions Sec. 321. Interim use of funds, personnel, and property. Sec. 322. Transfer of employees. Sec. 323. Property transferred. Sec. 324. Funds transferred. Sec. 325. Disposition of affairs. Sec. 326. Continuation of services. Subtitle C—Federal Deposit Insurance Corporation O:\AYO\AYO10732.xml [file 1 of 22] S.L.C. 4 Sec. 331. Deposit insurance reforms. Sec. 332. Management of the Federal Deposit Insurance Corporation. Subtitle D—Termination of Federal Thrift Charter Sec. 341. Termination of Federal savings associations. Sec. 342. Branching. TITLE IV—REGULATION OF ADVISERS TO HEDGE FUNDS AND OTHERS Sec. 401. Short title. Sec. 402. Definitions. Sec. 403. Elimination of private adviser exemption; limited exemption for for- eign private advisers; limited intrastate exemption. Sec. 404. Collection of systemic risk data; reports; examinations; disclosures. Sec. 405. Disclosure provision eliminated. Sec. 406. Clarification of rulemaking authority. Sec. 407. Exemption of venture capital fund advisers. Sec. 408. Exemption of and record keeping by private equity fund advisers. Sec. 409. Family offices. Sec. 410. State and Federal responsibilities; asset threshold for Federal reg- istration of investment advisers. Sec. 411. Custody of client assets. Sec. 412. Adjusting the accredited investor standard for inflation. Sec. 413. GAO study and report on accredited investors. Sec. 414. GAO study on self-regulatory organization for private funds. Sec. 415. Commission study and report on short selling. Sec. 416. Transition period. TITLE V—INSURANCE Subtitle A—Office of National Insurance Sec. 501. Short title. Sec. 502. Establishment of Office of National Insurance. Subtitle B—State-based Insurance Reform Sec. 511. Short title. Sec. 512. Effective date. PART I—N ONADMITTED NSURANCE Sec. 521. Reporting, payment, and allocation of premium taxes. Sec. 522. Regulation of nonadmitted insurance by insured’s home State. Sec. 523. Participation in national producer database. Sec. 524. Uniform standards for surplus lines eligibility. Sec. 525. Streamlined application for commercial purchasers. Sec. 526. GAO study of nonadmitted insurance market. Sec. 527. Definitions. PART II—R EINSURANCE Sec. 531. Regulation of credit for reinsurance and reinsurance agreements. Sec. 532. Regulation of reinsurer solvency. Sec. 533. Definitions. O:\AYO\AYO10732.xml [file 1 of 22] S.L.C. 5 PART III—R ULE OF C ONSTRUCTION Sec. 541. Rule of construction. Sec. 542. Severability. TITLE VI—IMPROVEMENTS TO REGULATION OF BANK AND SAV- INGS ASSOCIATION HOLDING COMPANIES AND DEPOSITORY IN- STITUTIONS Sec. 601. Short title. Sec. 602. Definition. Sec. 603. Moratorium and study on treatment of credit card banks, industrial loan companies, and certain other companies under the Bank Holding Company Act of 1956. Sec. 604. Reports and examinations of holding companies; regulation of func- tionally regulated subsidiaries. Sec. 605. Assuring consistent oversight of permissible activities of depository institution subsidiaries of holding companies. Sec. 606. Requirements for financial holding companies to remain well capital- ized and well managed. Sec. 607. Standards for interstate acquisitions. Sec. 608. Enhancing existing restrictions on bank transactions with affiliates. Sec. 609. Eliminating exceptions for transactions with financial subsidiaries. Sec. 610. Lending limits applicable to credit exposure on derivative trans- actions, repurchase agreements, reverse repurchase agree- ments, and securities lending and borrowing transactions. Sec. 611. Application of national bank lending limits to insured State banks. Sec. 612. Restriction on conversions of troubled banks. Sec. 613. De novo branching into States. Sec. 614. Lending limits to insiders. Sec. 615. Limitations on purchases of assets from insiders. Sec. 616. Regulations regarding capital levels of holding companies. Sec. 617. Elimination of elective investment bank holding company framework. Sec. 618. Securities holding companies. Sec. 619. Restrictions on capital market activity by banks and bank holding companies. Sec. 620. Concentration limits on large financial firms. TITLE VII—IMPROVEMENTS TO REGULATION OF OVER-THE- COUNTER DERIVATIVES MARKETS Sec. 701. Short title. Sec. 702. Findings and purposes. Subtitle A—Regulation of Swap Markets Sec. 711. Definitions. Sec. 712. Jurisdiction. Sec. 713. Clearing. Sec. 714. Public reporting of aggregate swap data. Sec. 715. Swap repositories. Sec. 716. Reporting and recordkeeping. Sec. 717. Registration and regulation of swap dealers and major swap partici- pants. Sec. 718. Segregation of assets held as collateral in swap transactions. Sec. 719. Conflicts of interest. Sec. 720. Alternative swap execution facilities. O:\AYO\AYO10732.xml [file 1 of 22] S.L.C. 6 Sec. 721. Derivatives transaction execution facilities and exempt boards of trade. Sec. 722. Designated contract markets. Sec. 723. Margin. Sec. 724. Position limits. Sec. 725. Enhanced authority over registered entities. Sec. 726. Foreign boards of trade. Sec. 727. Legal certainty for swaps. Sec. 728. FDICIA amendments. Sec. 729. Primary enforcement authority. Sec. 730. Enforcement. Sec. 731. Retail commodity transactions. Sec. 732. Large swap trader reporting. Sec. 733. Other authority. Sec. 734. Antitrust. Subtitle B—Regulation of Security-Based Swap Markets Sec. 751. Definitions under the Securities Exchange Act of 1934. Sec. 752. Repeal of prohibition on regulation of security-based swaps. Sec. 753. Amendments to the Securities Exchange Act of 1934. Sec. 754. Segregation of assets held as collateral in security-based swap trans- actions. Sec. 755. Reporting and recordkeeping. Sec. 756. State gaming and bucket shop laws. Sec. 757. Amendments to the Securities Act of 1933; treatment of security- based swaps. Sec. 758. Other authority. Sec. 759. Jurisdiction. Subtitle C—Other Provisions Sec. 761. International harmonization. Sec. 762. Interagency cooperation. Sec. 763. Study and report on implementation. Sec. 764. Recommendations for changes to insolvency laws. Sec. 765. Effective date. TITLE VIII—PAYMENT, CLEARING, AND SETTLEMENT SUPERVISION Sec. 801. Short title. Sec. 802. Findings and purposes. Sec. 803. Definitions. Sec. 804. Designation of systemic importance. Sec. 805. Standards for systemically important financial market utilities and payment, clearing, or settlement activities. Sec. 806. Operations of designated financial market utilities. Sec. 807. Examination of and enforcement actions against designated financial market utilities. Sec. 808. Examination of and enforcement actions against financial institutions subject to standards for designated activities. Sec. 809. Requests for information, reports, or records. Sec. 810. Rulemaking. Sec. 811. Other authority. Sec. 812. Effective date. O:\AYO\AYO10732.xml [file 1 of 22] S.L.C. 7 TITLE IX—INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE REGULATION OF SECURITIES Subtitle A—Increasing Investor Protection Sec. 911. Investor Advisory Committee established. Sec. 912. Clarification of authority of the Commission to engage in investor testing. Sec. 913. Study and rulemaking regarding obligations of brokers, dealers, and investment advisers. Sec. 914. Office of the Investor Advocate. Sec. 915. Streamlining of filing procedures for self-regulatory organizations. Sec. 916. Study regarding financial literacy among investors. Sec. 917. Study regarding mutual fund advertising. Sec. 918. Clarification of Commission authority to require investor disclosures before purchase of investment products and services. Sec. 919. Study on conflicts of interest. Sec. 919A. Study on improved investor access to information on investment ad- visers and broker-dealers. Sec. 919B. Study on financial planners and the use of financial designations. Subtitle B—Increasing Regulatory Enforcement and Remedies Sec. 921. Authority to issue rules related to mandatory predispute arbitration. Sec. 922. Whistleblower protection. Sec. 923. Conforming amendments for whistleblower protection. Sec. 924. Implementation and transition provisions for whistleblower protection. Sec. 925. Collateral bars. Sec. 926. Authority of State regulators over Regulation D offerings. Sec. 927. Equal treatment of self-regulatory organization rules. Sec. 928. Clarification that Section 205 of the Investment Advisers Act of 1940 does not apply to State-registered advisers. Sec. 929. Unlawful margin lending. Sec. 929A. Protection for employees of subsidiaries and affiliates of publicly traded companies. Sec. 929B. FAIR Fund amendments. Sec. 929C. Increasing the borrowing limit on Treasury loans. Subtitle C—Improvements to the Regulation of Credit Rating Agencies Sec. 931. Findings. Sec. 932. Enhanced regulation, accountability, and transparency of nationally recognized statistical rating organizations. Sec. 933. State of mind in private actions. Sec. 934. Referring tips to law enforcement or regulatory authorities. Sec. 935. Consideration of information from sources other than the issuer in rating decisions. Sec. 936. Qualification standards for credit rating analysts. Sec. 937. Timing of regulations. Sec. 938. Universal ratings symbols. Sec. 939. Government Accountability Office study and Federal agency review of required uses of nationally recognized statistical rating organi- zation ratings. Sec. 939A. Securities and Exchange Commission study on strengthening credit rating agency independence. O:\AYO\AYO10732.xml [file 1 of 22] S.L.C. 8 Sec. 939B. Government Accountability Office study on alternative business models. Sec. 939C. Government Accountability Office study on the creation of an inde- pendent professional analyst organization. Subtitle D—Improvements to the Asset-Backed Securitization Process Sec. 941. Regulation of credit risk retention. Sec. 942. Disclosures and reporting for asset-backed securities. Sec. 943. Representations and warranties in asset-backed offerings. Sec. 944. Exempted transactions under the Securities Act of 1933. Sec. 945. Due diligence analysis and disclosure in asset-backed securities issues. Subtitle E—Accountability and Executive Compensation Sec. 951. Shareholder vote on executive compensation disclosures. Sec. 952. Compensation committee independence. Sec. 953. Executive compensation disclosures. Sec. 954. Recovery of erroneously awarded compensation. Sec. 955. Disclosure regarding employee and director hedging. Sec. 956. Excessive compensation by holding companies of depository institu- tions. Sec. 957. Voting by brokers. Subtitle F—Improvements to the Management of the Securities and Exchange Commission Sec. 961. Report and certification of internal supervisory controls. Sec. 962. Triennial report on personnel management. Sec. 963. Annual financial controls audit. Sec. 964. Report on oversight of national securities associations. Sec. 965. Compliance examiners. Sec. 966. Suggestion program for employees of the Commission. Subtitle G—Strengthening Corporate Governance Sec. 971. Election of directors by majority vote in uncontested elections. Sec. 972. Proxy access. Sec. 973. Disclosures regarding chairman and CEO structures. Subtitle H—Municipal Securities Sec. 975. Regulation of municipal securities and changes to the board of the MSRB. Sec. 976. Government Accountability Office study of increased disclosure to in- vestors. Sec. 977. Government Accountability Office study on the municipal securities markets. Sec. 978. Study of funding for Government Accounting Standards Board. Sec. 979. Commission Office of Municipal Securities. Subtitle I—Public Company Accounting Oversight Board, Portfolio Margining, and Other Matters Sec. 981. Authority to share certain information with foreign authorities. Sec. 982. Oversight of brokers and dealers. Sec. 983. Portfolio margining. O:\AYO\AYO10732.xml [file 1 of 22] S.L.C. 9 Sec. 984. Loan or borrowing of securities. Sec. 985. Technical corrections to Federal securities laws. Sec. 986. Conforming amendments relating to repeal of the Public Utility Hold- ing Company Act of 1935. Sec. 987. Amendment to definition of material loss and nonmaterial losses to the Deposit Insurance Fund for purposes of Inspector General reviews. Sec. 988. Amendment to definition of material loss and nonmaterial losses to the National Credit Union Share Insurance Fund for purposes of Inspector General reviews. Sec. 989. Government Accountability Office study on proprietary trading. Sec. 989A. Senior investor protections. Sec. 989B. Changes in appointment of certain Inspectors General. Subtitle J—Self-funding of the Securities and Exchange Commission Sec. 991. Securities and Exchange Commission self-funding. TITLE X—BUREAU OF CONSUMER FINANCIAL PROTECTION Sec. 1001. Short title. Sec. 1002. Definitions. Subtitle A—Bureau of Consumer Financial Protection Sec. 1011. Establishment of the Bureau. Sec. 1012. Executive and administrative powers. Sec. 1013. Administration. Sec. 1014. Consumer Advisory Board. Sec. 1015. Coordination. Sec. 1016. Appearances before and reports to Congress. Sec. 1017. Funding; penalties and fines. Sec. 1018. Effective date. Subtitle B—General Powers of the Bureau Sec. 1021. Purpose, objectives, and functions. Sec. 1022. Rulemaking authority. Sec. 1023. Review of Bureau regulations. Sec. 1024. Supervision of nondepository covered persons. Sec. 1025. Supervision of very large banks, savings associations, and credit unions. Sec. 1026. Other banks, savings associations, and credit unions. Sec. 1027. Limitations on authorities of the Bureau; preservation of authori- ties. Sec. 1028. Authority to restrict mandatory pre-dispute arbitration. Sec. 1029. Effective date. Subtitle C—Specific Bureau Authorities Sec. 1031. Prohibiting unfair, deceptive, or abusive acts or practices. Sec. 1032. Disclosures. Sec. 1033. Consumer rights to access information. Sec. 1034. Response to consumer complaints and inquiries. Sec. 1035. Private education loan ombudsman. Sec. 1036. Prohibited acts. Sec. 1037. Effective date. O:\AYO\AYO10732.xml [file 1 of 22] S.L.C. 10 Subtitle D—Preservation of State Law Sec. 1041. Relation to State law. Sec. 1042. Preservation of enforcement powers of States. Sec. 1043. Preservation of existing contracts. Sec. 1044. State law preemption standards for national banks and subsidiaries clarified. Sec. 1045. Clarification of law applicable to nondepository institution subsidi- aries. Sec. 1046. State law preemption standards for Federal savings associations and subsidiaries clarified. Sec. 1047. Visitorial standards for national banks and savings associations. Sec. 1048. Effective date. Subtitle E—Enforcement Powers Sec. 1051. Definitions. Sec. 1052. Investigations and administrative discovery. Sec. 1053. Hearings and adjudication proceedings. Sec. 1054. Litigation authority. Sec. 1055. Relief available. Sec. 1056. Referrals for criminal proceedings. Sec. 1057. Employee protection. Sec. 1058. Effective date. Subtitle F—Transfer of Functions and Personnel; Transitional Provisions Sec. 1061. Transfer of consumer financial protection functions. Sec. 1062. Designated transfer date. Sec. 1063. Savings provisions. Sec. 1064. Transfer of certain personnel. Sec. 1065. Incidental transfers. Sec. 1066. Interim authority of the Secretary. Sec. 1067. Transition oversight. Subtitle G—Regulatory Improvements Sec. 1071. Collection of deposit account data. Sec. 1072. Small business data collection. Sec. 1073. GAO study on the effectiveness and impact of various appraisal methods. Sec. 1074. Prohibition on certain prepayment penalties. Sec. 1075. Assistance for economically vulnerable individuals and families. Sec. 1076. Remittance transfers. Subtitle H—Conforming Amendments Sec. 1081. Amendments to the Inspector General Act. Sec. 1082. Amendments to the Privacy Act of 1974. Sec. 1083. Amendments to the Alternative Mortgage Transaction Parity Act of 1982. Sec. 1084. Amendments to the Electronic Fund Transfer Act. Sec. 1085. Amendments to the Equal Credit Opportunity Act. Sec. 1086. Amendments to the Expedited Funds Availability Act. Sec. 1087. Amendments to the Fair Credit Billing Act. Sec. 1088. Amendments to the Fair Credit Reporting Act and the Fair and Ac- curate Credit Transactions Act. O:\AYO\AYO10732.xml [file 1 of 22] S.L.C. 11 Sec. 1089. Amendments to the Fair Debt Collection Practices Act. Sec. 1090. Amendments to the Federal Deposit Insurance Act. Sec. 1091. Amendments to the Gramm-Leach-Bliley Act. Sec. 1092. Amendments to the Home Mortgage Disclosure Act. Sec. 1093. Amendments to the Homeowners Protection Act of 1998. Sec. 1094. Amendments to the Home Ownership and Equity Protection Act of 1994. Sec. 1095. Amendments to the Omnibus Appropriations Act, 2009. Sec. 1096. Amendments to the Real Estate Settlement Procedures Act. Sec. 1097. Amendments to the Right to Financial Privacy Act of 1978. Sec. 1098. Amendments to the Secure and Fair Enforcement for Mortgage Li- censing Act of 2008. Sec. 1099. Amendments to the Truth in Lending Act. Sec. 1100. Amendments to the Truth in Savings Act. Sec. 1101. Amendments to the Telemarketing and Consumer Fraud and Abuse Prevention Act. Sec. 1102. Amendments to the Paperwork Reduction Act. Sec. 1103. Adjustments for inflation in the Truth in Lending Act. Sec. 1104. Effective date. TITLE XI—FEDERAL RESERVE SYSTEM PROVISIONS Sec. 1151. Federal Reserve Act amendments on emergency lending authority. Sec. 1152. Reviews of special Federal Reserve credit facilities. Sec. 1153. Public access to information. Sec. 1154. Liquidity event determination. Sec. 1155. Emergency financial stabilization. Sec. 1156. Additional related amendments. Sec. 1157. Federal Reserve Act amendments on Federal reserve bank govern- ance. Sec. 1158. Amendments to the Federal Reserve Act relating to supervision and regulation policy. TITLE XII—IMPROVING ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS Sec. 1201. Short title. Sec. 1202. Purpose. Sec. 1203. Definitions. Sec. 1204. Expanded access to mainstream financial institutions. Sec. 1205. Low-cost alternatives to payday loans. Sec. 1206. Grants to establish loan-loss reserve funds. Sec. 1207. Procedural provisions. Sec. 1208. Authorization of appropriations. Sec. 1209. Regulations. Sec. 1210. Evaluation and reports to Congress. 1 SEC. 2. DEFINITIONS. 2 As used in this Act, the following definitions shall 3 apply, except as the context otherwise requires or as other- 4 wise specifically provided in this Act: O:\AYO\AYO10732.xml [file 1 of 22] S.L.C. 12 1 (1) A FFILIATE .—The term ‘‘affiliate’’ means 2 any company that controls, is controlled by, or is 3 under common control with another company. 4 (2) A PPROPRIATE FEDERAL BANKING AGEN - 5 CY .—On and after the transfer date, the term ‘‘ap- 6 propriate Federal banking agency’’ has the same 7 meaning as in section 3(q) of the Federal Deposit 8 Insurance Act (12 U.S.C. 1813(q)), as amended by 9 title III. 10 (3) BOARD OF GOVERNORS .—The term ‘‘Board 11 of Governors’’ means the Board of Governors of the 12 Federal Reserve System. 13 (4) B UREAU .—The term ‘‘Bureau’’ means the 14 Bureau of Consumer Financial Protection estab- 15 lished under title X. 16 (5) C OMMISSION .—The term ‘‘Commission’’ 17 means the Securities and Exchange Commission, ex- 18 cept in the context of the Commodity Futures Trad- 19 ing Commission. 20 (6) C ORPORATION .—The term ‘‘Corporation’’ 21 means the Federal Deposit Insurance Corporation. 22 (7) COUNCIL .—The term ‘‘Council’’ means the 23 Financial Stability Oversight Council established 24 under title I. O:\AYO\AYO10732.xml [file 1 of 22] S.L.C. 13 1 (8) CREDIT UNION .—The term ‘‘credit union’’ 2 means a Federal credit union, State credit union, or 3 State-chartered credit union, as those terms are de- 4 fined in section 101 of the Federal Credit Union Act 5 (12 U.S.C. 1752). 6 (9) FEDERAL BANKING AGENCY .—The term— 7 (A) ‘‘Federal banking agency’’ means, indi- 8 vidually, the Board of Governors, the Office of 9 the Comptroller of the Currency, and the Cor- 10 poration; and 11 (B) ‘‘Federal banking agencies’’ means all 12 of the agencies referred to in subparagraph (A), 13 collectively. 14 (10) F UNCTIONALLY REGULATED SUB - 15 SIDIARY .—The term ‘‘functionally regulated sub- 16 sidiary’’ has the same meaning as in section 5(c)(5) 17 of the Bank Holding Company Act of 1956 (12 18 U.S.C. 1844(c)(5)). 19 (11) P RIMARY FINANCIAL REGULATORY AGEN - 20 CY .—The term ‘‘primary financial regulatory agen- 21 cy’’ means— 22 (A) the appropriate Federal banking agen- 23 cy, with respect to institutions described in sec- 24 tion 3(q) of the Federal Deposit Insurance Act, 25 except to the extent that an institution is or the O:\AYO\AYO10732.xml [file 1 of 22] S.L.C. 14 1 activities of an institution are otherwise subject 2 to the jurisdiction of an agency listed in sub- 3 paragraph (B), (C), (D), or (E); 4 (B) the Securities and Exchange Commis- 5 sion, with respect to— 6 (i) any broker or dealer that is reg- 7 istered with the Commission under the Se- 8 curities Exchange Act of 1934; 9 (ii) any investment company that is 10 registered with the Commission under the 11 Investment Company Act of 1940; 12 (iii) any investment adviser that is 13 registered with the Commission under the 14 Investment Advisers Act of 1940, with re- 15 spect to the investment advisory activities 16 of such company and activities that are in- 17 cidental to such advisory activities; and 18 (iv) any clearing agency registered 19 with the Commission under the Securities 20 Exchange Act of 1934; 21 (C) the Commodity Futures Trading Com- 22 mission, with respect to any futures commission 23 merchant, any commodity trading adviser, and 24 any commodity pool operator registered with 25 the Commodity Futures Trading Commission O:\AYO\AYO10732.xml [file 1 of 22] S.L.C. 15 1 under the Commodity Exchange Act, with re- 2 spect to the commodities activities of such enti- 3 ty and activities that are incidental to such 4 commodities activities; 5 (D) the State insurance authority of the 6 State in which an insurance company is domi- 7 ciled, with respect to the insurance activities 8 and activities that are incidental to such insur- 9 ance activities of an insurance company that is 10 subject to supervision by the State insurance 11 authority under State insurance law; and 12 (E) the Federal Housing Finance Agency, 13 with respect to Federal Home Loan Banks or 14 the Federal Home Loan Bank System, and 15 with respect to the Federal National Mortgage 16 Association or the Federal Home Loan Mort- 17 gage Corporation. 18 (12) P RUDENTIAL STANDARDS .—The term 19 ‘‘prudential standards’’ means enhanced supervision 20 and regulatory standards developed by the Board of 21 Governors under section 115 or 165. 22 (13) S ECRETARY .—The term ‘‘Secretary’’ 23 means the Secretary of the Treasury. 24 (14) SECURITIES TERMS .—The— O:\AYO\AYO10732.xml [file 1 of 22] S.L.C. 16 1 (A) terms ‘‘broker’’, ‘‘dealer’’, ‘‘issuer’’, 2 ‘‘nationally recognized statistical ratings organi- 3 zation’’, ‘‘security’’, and ‘‘securities laws’’ have 4 the same meanings as in section 3 of the Secu- 5 rities Exchange Act of 1934 (15 U.S.C. 78c); 6 (B) term ‘‘investment adviser’’ has the 7 same meaning as in section 202 of the Invest- 8 ment Advisers Act of 1940 (15 U.S.C. 80b–2); 9 and 10 (C) term ‘‘investment company’’ has the 11 same meaning as in section 3 of the Investment 12 Company Act of 1940 (15 U.S.C. 80a–3). 13 (15) S TATE .—The term ‘‘State’’ means any 14 State, commonwealth, territory, or possession of the 15 United States, the District of Columbia, the Com- 16 monwealth of Puerto Rico, the Commonwealth of the 17 Northern Mariana Islands, American Samoa, Guam, 18 or the United States Virgin Islands. 19 (16) T RANSFER DATE .—The term ‘‘transfer 20 date’’ means the date established under section 311. 21 (17) OTHER INCORPORATED DEFINITIONS .— 22 (A) F EDERAL DEPOSIT INSURANCE ACT .— 23 The terms ‘‘affiliate’’, ‘‘bank’’, ‘‘bank holding 24 company’’, ‘‘control’’ (when used with respect to 25 a depository institution), ‘‘deposit’’, ‘‘depository O:\AYO\AYO10732.xml [file 1 of 22] S.L.C. 17 1 institution’’, ‘‘Federal depository institution’’, 2 ‘‘Federal savings association’’, ‘‘foreign bank’’, 3 ‘‘including’’, ‘‘insured branch’’, ‘‘insured deposi- 4 tory institution’’, ‘‘national member bank’’, 5 ‘‘national nonmember bank’’, ‘‘savings associa- 6 tion’’, ‘‘State bank’’, ‘‘State depository institu- 7 tion’’, ‘‘State member bank’’, ‘‘State non- 8 member bank’’, ‘‘State savings association’’, 9 and ‘‘subsidiary’’ have the same meanings as in 10 section 3 of the Federal Deposit Insurance Act 11 (12 U.S.C. 1813). 12 (B) HOLDING COMPANIES .—The term— 13 (i) ‘‘bank holding company’’ has the 14 same meaning as in section 2 of the Bank 15 Holding Company Act of 1956 (12 U.S.C. 16 1841); 17 (ii) ‘‘financial holding company’’ has 18 the same meaning as in section 2(p) of the 19 Bank Holding Company Act of 1956 (12 20 U.S.C. 1841(p)); and 21 (iii) ‘‘savings and loan holding com- 22 pany’’ has the same meaning as in section 23 10 of the Home Owners’ Loan Act (12 24 U.S.C. 1467a(a)). O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 18 1 SEC. 3. SEVERABILITY. 2 If any provision of this Act, an amendment made by 3 this Act, or the application of such provision or amend- 4 ment to any person or circumstance is held to be unconsti- 5 tutional, the remainder of this Act, the amendments made 6 by this Act, and the application of the provisions of such 7 to any person or circumstance shall not be affected there- 8 by. 9 SEC. 4. EFFECTIVE DATE. 10 Except as otherwise specifically provided in this Act 11 or the amendments made by this Act, this Act and such 12 amendments shall take effect 1 day after the date of en- 13 actment of this Act. 14 TITLE I—FINANCIAL STABILITY 15 SEC. 101. SHORT TITLE. 16 This title may be cited as the ‘‘Financial Stability Act 17 of 2010’’. 18 SEC. 102. DEFINITIONS. 19 (a) IN G ENERAL .—For purposes of this title, unless 20 the context otherwise requires, the following definitions 21 shall apply: 22 (1) B ANK HOLDING COMPANY .—The term 23 ‘‘bank holding company’’ has the same meaning as 24 in section 2 of the Bank Holding Company Act of 25 1956 (12 U.S.C. 1841). A foreign bank or company 26 that is treated as a bank holding company for pur- O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 19 1 poses of the Bank Holding Company Act of 1956, 2 pursuant to section 8(a) of the International Bank- 3 ing Act of 1978 (12 U.S.C. 3106(a)), shall be treat- 4 ed as a bank holding company for purposes of this 5 title. 6 (2) C HAIRPERSON .—The term ‘‘Chairperson’’ 7 means the Chairperson of the Council. 8 (3) M EMBER AGENCY .—The term ‘‘member 9 agency’’ means an agency represented by a voting 10 member of the Council. 11 (4) N ONBANK FINANCIAL COMPANY DEFINI - 12 TIONS .— 13 (A) F OREIGN NONBANK FINANCIAL COM - 14 PANY .—The term ‘‘foreign nonbank financial 15 company’’ means a company (other than a com- 16 pany that is, or is treated in the United States 17 as, a bank holding company or a subsidiary 18 thereof) that is— 19 (i) incorporated or organized in a 20 country other than the United States; and 21 (ii) substantially engaged in, including 22 through a branch in the United States, ac- 23 tivities in the United States that are finan- 24 cial in nature (as defined in section 4(k) of 25 the Bank Holding Company Act of 1956). O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 20 1 (B) U.S. NONBANK FINANCIAL COM - 2 PANY.—The term ‘‘U.S. nonbank financial com- 3 pany’’ means a company (other than a bank 4 holding company or a subsidiary thereof, or a 5 Farm Credit System institution chartered and 6 subject to the provisions of the Farm Credit 7 Act of 1971 (12 U.S.C. 2001 et. seq.)) that 8 is— 9 (i) incorporated or organized under 10 the laws of the United States or any State; 11 and 12 (ii) substantially engaged in activities 13 in the United States that are financial in 14 nature (as defined in section 4(k) of the 15 Bank Holding Company Act of 1956). 16 (C) N ONBANK FINANCIAL COMPANY .—The 17 term ‘‘nonbank financial company’’ means a 18 U.S. nonbank financial company and a foreign 19 nonbank financial company. 20 (D) N ONBANK FINANCIAL COMPANY SU - 21 PERVISED BY THE BOARD OF GOVERNORS .— 22 The term ‘‘nonbank financial company super- 23 vised by the Board of Governors’’ means a 24 nonbank financial company that the Council O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 21 1 has determined under section 113 shall be su- 2 pervised by the Board of Governors. 3 (5) O FFICE OF FINANCIAL RESEARCH .—The 4 term ‘‘Office of Financial Research’’ means the of- 5 fice established under section 152. 6 (6) S IGNIFICANT INSTITUTIONS .—The terms 7 ‘‘significant nonbank financial company’’ and ‘‘sig- 8 nificant bank holding company’’ have the meanings 9 given those terms by rule of the Board of Governors. 10 (b) D EFINITIONAL CRITERIA .—The Board of Gov- 11 ernors shall establish, by regulation, the criteria to deter- 12 mine whether a company is substantially engaged in activi- 13 ties in the United States that are financial in nature (as 14 defined in section 4(k) of the Bank Holding Company Act 15 of 1956) for purposes of the definitions of the terms ‘‘U.S. 16 nonbank financial company’’ and ‘‘foreign nonbank finan- 17 cial company’’ under subsection (a)(4). 18 (c) FOREIGN NONBANK F INANCIAL COMPANIES .— 19 For purposes of the authority of the Board of Governors 20 under this title with respect to foreign nonbank financial 21 companies, references in this title to ‘‘company’’ or ‘‘sub- 22 sidiary’’ include only the United States activities and sub- 23 sidiaries of such foreign company. O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 22 1 Subtitle A—Financial Stability 2 Oversight Council 3 SEC. 111. FINANCIAL STABILITY OVERSIGHT COUNCIL ES- 4 TABLISHED. 5 (a) ESTABLISHMENT .—Effective on the date of en- 6 actment of this Act, there is established the Financial Sta- 7 bility Oversight Council. 8 (b) M EMBERSHIP .—The Council shall consist of the 9 following members: 10 (1) VOTING MEMBERS .—The voting members, 11 who shall each have 1 vote on the Council shall be— 12 (A) the Secretary of the Treasury, who 13 shall serve as Chairperson of the Council; 14 (B) the Chairman of the Board of Gov- 15 ernors; 16 (C) the Comptroller of the Currency; 17 (D) the Director of the Bureau; 18 (E) the Chairman of the Commission; 19 (F) the Chairperson of the Corporation; 20 (G) the Chairperson of the Commodity Fu- 21 tures Trading Commission; 22 (H) the Director of the Federal Housing 23 Finance Agency; and O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 23 1 (I) an independent member appointed by 2 the President, by and with the advice and con- 3 sent of the Senate, having insurance expertise. 4 (2) N ONVOTING MEMBERS .—The Director of 5 the Office of Financial Research— 6 (A) shall serve in an advisory capacity as 7 a nonvoting member of the Council; and 8 (B) may not be excluded from any of the 9 proceedings, meetings, discussions, or delibera- 10 tions of the Council. 11 (c) TERMS ; VACANCY .— 12 (1) TERMS .—The independent member of the 13 Council shall serve for a term of 6 years. 14 (2) V ACANCY .—Any vacancy on the Council 15 shall be filled in the manner in which the original 16 appointment was made. 17 (3) A CTING OFFICIALS MAY SERVE .—In the 18 event of a vacancy in the office of the head of a 19 member agency or department, and pending the ap- 20 pointment of a successor, or during the absence or 21 disability of the head of a member agency or depart- 22 ment, the acting head of the member agency or de- 23 partment shall serve as a member of the Council in 24 the place of that agency or department head. O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 24 1 (d) TECHNICAL AND P ROFESSIONAL A DVISORY C OM - 2 MITTEES .—The Council may appoint such special advi- 3 sory, technical, or professional committees as may be use- 4 ful in carrying out the functions of the Council, including 5 an advisory committee consisting of State regulators, and 6 the members of such committees may be members of the 7 Council, or other persons, or both. 8 (e) MEETINGS .— 9 (1) TIMING .—The Council shall meet at the call 10 of the Chairperson or a majority of the members 11 then serving, but not less frequently than quarterly. 12 (2) RULES FOR CONDUCTING BUSINESS .—The 13 Council shall adopt such rules as may be necessary 14 for the conduct of the business of the Council. Such 15 rules shall be rules of agency organization, proce- 16 dure, or practice for purposes of section 553 of title 17 5, United States Code. 18 (f) VOTING .—Unless otherwise specified, the Council 19 shall make all decisions that it is authorized or required 20 to make by a majority vote of the members then serving. 21 (g) N ONAPPLICABILITY OF FACA.—The Federal Ad- 22 visory Committee Act (5 U.S.C. App.) shall not apply to 23 the Council, or to any special advisory, technical, or pro- 24 fessional committee appointed by the Council, except that, 25 if an advisory, technical, or professional committee has O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 25 1 one or more members who are not employees of or affili- 2 ated with the United States Government, the Council shall 3 publish a list of the names of the members of such com- 4 mittee. 5 (h) ASSISTANCE F ROM FEDERAL A GENCIES .—Any 6 department or agency of the United States may provide 7 to the Council and any special advisory, technical, or pro- 8 fessional committee appointed by the Council, such serv- 9 ices, funds, facilities, staff, and other support services as 10 the Council may determine advisable. 11 (i) OMPENSATION OF MEMBERS .— 12 (1) FEDERAL EMPLOYEE MEMBERS .—All mem- 13 bers of the Council who are officers or employees of 14 the United States shall serve without compensation 15 in addition to that received for their services as offi- 16 cers or employees of the United States. 17 (2) C OMPENSATION FOR NON FEDERAL MEM - 18 BER .—Section 5314 of title 5, United States Code, 19 is amended by adding at the end the following: 20 ‘‘Independent Member of the Financial Stability 21 Oversight Council (1).’’. 22 (j) DETAIL OFG OVERNMENT EMPLOYEES .—Any em- 23 ployee of the Federal Government may be detailed to the 24 Council without reimbursement, and such detail shall be 25 without interruption or loss of civil service status or privi- O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 26 1 lege. An employee of the Federal Government detailed to 2 the Council shall report to and be subject to oversight by 3 the Council during the assignment to the Council, and 4 shall be compensated by the department or agency from 5 which the employee was detailed. 6 SEC. 112. COUNCIL AUTHORITY. 7 (a) PURPOSES AND D UTIES OF THE COUNCIL .— 8 (1) N GENERAL .—The purposes of the Council 9 are— 10 (A) to identify risks to the financial sta- 11 bility of the United States that could arise from 12 the material financial distress or failure of 13 large, interconnected bank holding companies or 14 nonbank financial companies; 15 (B) to promote market discipline, by elimi- 16 nating expectations on the part of shareholders, 17 creditors, and counterparties of such companies 18 that the Government will shield them from 19 losses in the event of failure; and 20 (C) to respond to emerging threats to the 21 stability of the United States financial markets. 22 (2) DUTIES .—The Council shall, in accordance 23 with this title— 24 (A) collect information from member agen- 25 cies and other Federal and State financial regu- O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 27 1 latory agencies and, if necessary to assess risks 2 to the United States financial system, direct the 3 Office of Financial Research to collect informa- 4 tion from bank holding companies and nonbank 5 financial companies; 6 (B) provide direction to, and request data 7 and analyses from, the Office of Financial Re- 8 search to support the work of the Council; 9 (C) monitor the financial services market- 10 place in order to identify potential threats to 11 the financial stability of the United States; 12 (D) facilitate information sharing and co- 13 ordination among the member agencies and 14 other Federal and State agencies regarding do- 15 mestic financial services policy development, 16 rulemaking, examinations, reporting require- 17 ments, and enforcement actions; 18 (E) recommend to the member agencies 19 general supervisory priorities and principles re- 20 flecting the outcome of discussions among the 21 member agencies; 22 (F) identify gaps in regulation that could 23 pose risks to the financial stability of the 24 United States; O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 28 1 (G) require supervision by the Board of 2 Governors for nonbank financial companies that 3 may pose risks to the financial stability of the 4 United States in the event of their material fi- 5 nancial distress or failure, pursuant to section 6 113; 7 (H) make recommendations to the Board 8 of Governors concerning the establishment of 9 heightened prudential standards for risk-based 10 capital, leverage, liquidity, contingent capital, 11 resolution plans and credit exposure reports, 12 concentration limits, enhanced public disclo- 13 sures, and overall risk management for 14 nonbank financial companies and large, inter- 15 connected bank holding companies supervised 16 by the Board of Governors; 17 (I) identify systemically important finan- 18 cial market utilities and payment, clearing, and 19 settlement activities (as that term is defined in 20 title VIII), and require such utilities and activi- 21 ties to be subject to standards established by 22 the Board of Governors; 23 (J) make recommendations to primary fi- 24 nancial regulatory agencies to apply new or 25 heightened standards and safeguards for finan- O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 29 1 cial activities or practices that could create or 2 increase risks of significant liquidity, credit, or 3 other problems spreading among bank holding 4 companies, nonbank financial companies, and 5 United States financial markets; 6 (K) make determinations regarding exemp- 7 tions in title VII, where necessary; 8 (L) provide a forum for— 9 (i) discussion and analysis of emerg- 10 ing market developments and financial reg- 11 ulatory issues; and 12 (ii) resolution of jurisdictional dis- 13 putes among the members of the Council; 14 and 15 (M) annually report to and testify before 16 Congress on— 17 (i) the activities of the Council; 18 (ii) significant financial market devel- 19 opments and potential emerging threats to 20 the financial stability of the United States; 21 (iii) all determinations made under 22 section 113 or title VIII, and the basis for 23 such determinations; and 24 (iv) recommendations— O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 30 1 (I) to enhance the integrity, effi- 2 ciency, competitiveness, and stability 3 of United States financial markets; 4 (II) to promote market discipline; 5 and 6 (III) to maintain investor con- 7 fidence. 8 (b) AUTHORITY TO O BTAIN INFORMATION .— 9 (1) IN GENERAL .—The Council may receive, 10 and may request the submission of, any data or in- 11 formation from the Office of Financial Research and 12 member agencies, as necessary— 13 (A) to monitor the financial services mar- 14 ketplace to identify potential risks to the finan- 15 cial stability of the United States; or 16 (B) to otherwise carry out any of the pro- 17 visions of this title. 18 (2) UBMISSIONS BY THE OFFICE AND MEMBER 19 AGENCIES .—Notwithstanding any other provision of 20 law, the Office of Financial Research and any mem- 21 ber agency are authorized to submit information to 22 the Council. 23 (3) FINANCIAL DATA COLLECTION .— 24 (A) I N GENERAL .—The Council, acting 25 through the Office of Financial Research, may O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 31 1 require the submission of periodic and other re- 2 ports from any nonbank financial company or 3 bank holding company for the purpose of as- 4 sessing the extent to which a financial activity 5 or financial market in which the nonbank finan- 6 cial company or bank holding company partici- 7 pates, or the nonbank financial company or 8 bank holding company itself, poses a threat to 9 the financial stability of the United States. 10 (B) M ITIGATION OF REPORT BURDEN .— 11 Before requiring the submission of reports from 12 any nonbank financial company or bank holding 13 company that is regulated by a member agency 14 or any primary financial regulatory agency, the 15 Council, acting through the Office of Financial 16 Research, shall coordinate with such agencies 17 and shall, whenever possible, rely on informa- 18 tion available from the Office of Financial Re- 19 search or such agencies. 20 (4) B ACK-UP EXAMINATION BY THE BOARD OF 21 GOVERNORS .—If the Council is unable to determine 22 whether the financial activities of a nonbank finan- 23 cial company pose a threat to the financial stability 24 of the United States, based on information or re- 25 ports obtained under paragraph (3), discussions with O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 32 1 management, and publicly available information, the 2 Council may request the Board of Governors, and 3 the Board of Governors is authorized, to conduct an 4 examination of the nonbank financial company for 5 the sole purpose of determining whether the 6 nonbank financial company should be supervised by 7 the Board of Governors for purposes of this title. 8 (5) CONFIDENTIALITY .— 9 (A) IN GENERAL .—The Council, the Office 10 of Financial Research, and the other member 11 agencies shall maintain the confidentiality of 12 any data, information, and reports submitted 13 under this subsection and subtitle B. 14 (B) R ETENTION OF PRIVILEGE .—The sub- 15 mission of any nonpublicly available data or in- 16 formation under this subsection and subtitle B 17 shall not constitute a waiver of, or otherwise af- 18 fect, any privilege arising under Federal or 19 State law (including the rules of any Federal or 20 State court) to which the data or information is 21 otherwise subject. 22 (C) F REEDOM OF INFORMATION ACT .— 23 Section 552 of title 5, United States Code, in- 24 cluding the exceptions thereunder, shall apply O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 33 1 to any data or information submitted under this 2 subsection and subtitle B. 3 SEC. 113. AUTHORITY TO REQUIRE SUPERVISION AND REG- 4 ULATION OF CERTAIN NONBANK FINANCIAL 5 COMPANIES. 6 (a) U.S. N ONBANK F INANCIAL C OMPANIES SUPER - 7 VISED BY THE B OARD OF G OVERNORS .— 8 (1) DETERMINATION .—The Council, on a non- 9 delegable basis and by a vote of not fewer than23 10 of the members then serving, including an affirma- 11 tive vote by the Chairperson, may determine that a 12 U.S. nonbank financial company shall be supervised 13 by the Board of Governors and shall be subject to 14 prudential standards, in accordance with this title, if 15 the Council determines that material financial dis- 16 tress at the U.S. nonbank financial company would 17 pose a threat to the financial stability of the United 18 States. 19 (2) C ONSIDERATIONS .—Each determination 20 under paragraph (1) shall be based on a consider- 21 ation by the Council of— 22 (A) the degree of leverage of the company; 23 (B) the amount and nature of the financial 24 assets of the company; O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 34 1 (C) the amount and types of the liabilities 2 of the company, including the degree of reliance 3 on short-term funding; 4 (D) the extent and types of the off-bal- 5 ance-sheet exposures of the company; 6 (E) the extent and types of the trans- 7 actions and relationships of the company with 8 other significant nonbank financial companies 9 and significant bank holding companies; 10 (F) the importance of the company as a 11 source of credit for households, businesses, and 12 State and local governments and as a source of 13 liquidity for the United States financial system; 14 (G) the recommendation, if any, of a mem- 15 ber of the Council; 16 (H) the operation of, or ownership interest 17 in, any clearing, settlement, or payment busi- 18 ness of the company; 19 (I) the extent to which— 20 (i) assets are managed rather than 21 owned by the company; and 22 (ii) ownership of assets under man- 23 agement is diffuse; and 24 (J) any other factors that the Council 25 deems appropriate. O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 35 1 (b) FOREIGN N ONBANK F INANCIAL C OMPANIES SU- 2 PERVISED BY THE BOARD OF G OVERNORS .— 3 (1) DETERMINATION .—The Council, on a non- 4 delegable basis and by a vote of not fewer than23 5 of the members then serving, including an affirma- 6 tive vote by the Chairperson, may determine that a 7 foreign nonbank financial company that has sub- 8 stantial assets or operations in the United States 9 shall be supervised by the Board of Governors and 10 shall be subject to prudential standards in accord- 11 ance with this title, if the Council determines that 12 material financial distress at the foreign nonbank fi- 13 nancial company would pose a threat to the financial 14 stability of the United States. 15 (2) C ONSIDERATIONS .—Each determination 16 under paragraph (1) shall be based on a consider- 17 ation by the Council of— 18 (A) the degree of leverage of the company; 19 (B) the amount and nature of the United 20 States financial assets of the company; 21 (C) the amount and types of the liabilities 22 of the company used to fund activities and op- 23 erations in the United States, including the de- 24 gree of reliance on short-term funding; O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 36 1 (D) the extent of the United States-related 2 off-balance-sheet exposure of the company; 3 (E) the extent and type of the transactions 4 and relationships of the company with other 5 significant nonbank financial companies and 6 bank holding companies; 7 (F) the importance of the company as a 8 source of credit for United States households, 9 businesses, and State and local governments, 10 and as a source of liquidity for the United 11 States financial system; 12 (G) the recommendation, if any, of a mem- 13 ber of the Council; 14 (H) the extent to which— 15 (i) assets are managed rather than 16 owned by the company; and 17 (ii) ownership of assets under man- 18 agement is diffuse; and 19 (I) any other factors that the Council 20 deems appropriate. 21 (c) R EEVALUATION AND RESCISSION .—The Council 22 shall— 23 (1) not less frequently than annually, reevaluate 24 each determination made under subsections (a) and O:\AYO\AYO10728.xml [file 2 of 22] S.L.C. 37 1 (b) with respect to each nonbank financial company 2 sup
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