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Sep 9, 2016viewing Reported in House Mr. Hensarling (for himself, Mr. Garrett, Mr. Neugebauer, Mr. Luetkemeyer, Mr. Huizenga of Michigan, and Mr. Duffy) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committees on Agriculture, Ways and Means, the Judiciary, Oversight and Government Reform, Transportation and Infrastructure, Rules, the Budget, and Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned See what changed
Sep 9, 2016 Introduced in House Mr. Hensarling (for himself, Mr. Garrett, Mr. Neugebauer, Mr. Luetkemeyer, Mr. Huizenga of Michigan, and Mr. Duffy) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committees on Agriculture, Ways and Means, the Judiciary, Oversight and Government Reform, Transportation and Infrastructure, Rules, the Budget, and Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

H.R. 5983 — what changed

Financial CHOICE Act of 2016

From Introduced in House to Reported in House. 23 sections amended between Introduced in House and Reported in House.

Sec. 105 Definitions

For purposes of this title:

(1)

Appropriate Federal banking agency— The term “appropriate Federal banking agency”—

(A)

has the meaning given such term under section 3 of the Federal Deposit Insurance Act; and

(B)

means the National Credit Union Administration, in the case of an insured credit union.

(2)

Banking organization— The term “banking organization” means—

(A)

an insured depository institution;

(B)

an insured credit union;

(C)

a depository institution holding company;

(D)

a company that is treated as a bank holding company for purposes of section 8 of the International Banking Act; and

(E)

a U.S. intermediate holding company established by a foreign banking organization pursuant to section 252.153 of title 12, Code of Federal Regulations.

(3)

Foreign exchange swap— The term “foreign exchange swap” has the meaning given that term under section 1a of the Commodity Exchange Act.

(4)

Insured credit union— The term “insured credit union” has the meaning given that term under section 101 of the Federal Credit Union Act.

(5)

Leverage exposure— The term “leverage exposure”—

(A)

changed with respect to a banking organization other than a an insured credit union or a traditional banking organization, has the meaning given the term “total leverage exposure” under section 3.10(c)(4)(ii), 217.10(c)(4), or 324.10(c)(4) of title 12, Code of Federal Regulations, as applicable, as in effect on January 1, 2015;

(B)

changed with respect to a traditional banking organization other than a an insured credit union, means total assets (minus any items deducted from common equity tier 1 capital) as calculated in accordance with generally accepted accounting principles and as reported on the traditional banking organization’s applicable regulatory filing with the banking organization’s appropriate Federal banking agency; and

(C)

changed with respect to a banking organization that is a an insured credit union, has the meaning given the term “total assets” under section 702.2 of title 12, Code of Federal Regulations, as in effect on January 1, 2015.

(6)

Leverage ratio definitions—

(A)

Average leverage ratio— With respect to a banking organization, the term “average leverage ratio” means the average of the banking organization’s quarterly leverage ratios for each of the most recently completed four calendar quarters.

(B)

Quarterly leverage ratio— With respect to a banking organization and a calendar quarter, the term “quarterly leverage ratio” means the organization’s tangible equity divided by the organization’s leverage exposure, expressed as a percentage, on the last day of such quarter.

(7)

NACR— The term “NACR” means—

(A)

book equity less nonperforming assets plus loan loss reserves, divided by

(B)

total banking organization assets.

(8)

Nonperforming assets— The term “nonperforming assets” means—

(A)

20 percent of assets that are past due 30 to 89 days, plus

(B)

50 percent of assets that are past due 90 days or more, plus

(C)

100 percent of nonaccrual assets and other real estate owned.

(9)

Qualifying banking organization— The term “qualifying banking organization” means a banking organization that has made an election under section 101 and with respect to which such election is in effect.

(10)

Security-based swap— The term “security-based swap” has the meaning given that term under section 3 of the Securities Exchange Act of 1934.

(11)

Swap— The term “swap” has the meaning given that term under section 1a of the Commodity Exchange Act.

(12)

Tangible equity— The term “tangible equity”—

(A)

with respect to a banking organization other than a credit union, means the sum of—

(i)

common equity tier 1 capital;

(ii)

additional tier 1 capital consisting of instruments issued on or before June 1, 2016; and

(iii)

with respect to a depository institution holding company that had less than $15,000,000,000 in total consolidated assets as of December 31, 2009, or March 31, 2010, or a banking organization that was a mutual holding company as of May 19, 2010, trust preferred securities issued prior to May 19, 2010, to the extent such organization was permitted, as of the date of the enactment of this Act, to consider such securities as tier 1 capital under existing regulations of the appropriate Federal banking agency; and

(B)

with respect to a banking organization that is a credit union, has the meaning given the term “net worth” under section 702.2 of title 12, Code of Federal Regulations, as in effect on January 1, 2015.

(13)

Traditional banking organization— The term “traditional banking organization” means a banking organization that—

(A)

has zero trading assets and zero trading liabilities;

(B)

does not engage in swaps or security-based swaps, other than swaps or security-based swaps referencing interest rates or foreign exchange swaps; and

(C)

has a total notional exposure of swaps and security-based swaps of not more than $8,000,000,000.

(14)

Other banking terms— The terms “insured depository institution” and “depository institution holding company” have the meaning given those terms, respectively, under section 3 of the Federal Deposit Insurance Act.

(15)

Other capital terms— With respect to a banking organization, the terms “additional tier 1 capital” and “common equity tier 1 capital” have the meaning given such terms, respectively, under section 3.20, 217.20, or 324.20 of title 12, Code of Federal Regulations, as applicable, as in effect on January 1, 2015.

Sec. 211 Repeal and modification of provisions of the Financial Stability Act of 2010

(a)

Repeals— The following provisions of the Financial Stability Act of 2010 are repealed, and the provisions of law amended or repealed by such provisions are restored or revived as if such provisions had not been enacted:

(1)

Subtitle B.

(2)

Section 113.

(3)

Section 114.

(4)

Section 115.

(5)

Section 116.

(6)

Section 117.

(7)

Section 119.

(8)

Section 120.

(9)

Section 121.

(10)

Section 161.

(11)

Section 162.

(12)

Section 164.

(13)

Section 166.

(14)

Section 167.

(15)

Section 168.

(16)

Section 170.

(17)

Section 172.

(18)

Section 174.

(19)

Section 175.

(b)

Additional modifications— The Financial Stability Act of 2010 (12 U.S.C. 5311 et seq.) is amended—

(1)

in section 102(a), by striking paragraph (5);

(2)

in section 111—

(A)

in subsection (b)—

(i)

in paragraph (1)—

(I)

by striking “who shall each” and inserting “who shall, except as provided below, each”; and

(II)

by amending subparagraphs (B) through (I) to read as follows:

“(B) each member of the Board of Governors, who shall collectively have 1 vote on the Council;

“(C) each member of the Board of Directors of the Office of the Comptroller of the Currency, who shall collectively have 1 vote on the Council;

“(D) each member of the Consumer Financial Opportunity Commission, who shall collectively have 1 vote on the Council;

“(E) each member of the Commission, who shall collectively have 1 vote on the Council;

“(F) each member of the Corporation, who shall collectively have 1 vote on the Council;

“(G) each member of the Commodity Futures Trading Commission, who shall collectively have 1 vote on the Council;

changed “(H) each member of the Board of Directors of the Federal Housing Finance Agency, who shall collectively have 1 vote on the ~~Council~~Council;

changed “(I) each member of the National Credit Union Administration Board, who shall collectively have 1 vote on the ~~Council;”~~Council; and”

(ii)

in paragraph (2)—

(I)

by striking subparagraph (A); and

(II)

by redesignating subparagraphs (B), (C), (D), and (E) as subparagraphs (A), (B), (C), and (D), respectively; and

(iii)

by adding at the end the following:

“(4) Voting by multi-person entity

“(A) Voting within the entity—An entity described under subparagraph (B) through (I) of paragraph (1) shall determine the entity’s Council vote by using the voting process normally applicable to votes by the entity’s members.

“(B) Casting of entity vote—The 1 collective Council vote of an entity described under subparagraph (A) shall be cast by the head of such agency or, in the event such head is unable to cast such vote, the next most senior member of the entity available.”

(B)

in subsection (c), by striking “subparagraphs (C), (D), and (E)” and inserting “subparagraphs (B), (C), and (D)”;

(C)

in subsection (e), by adding at the end the following:

“(3) Staff access—Any member of the Council may select to have one or more individuals on the member’s staff attend a meeting of the Council, including any meeting of representatives of the member agencies other than the members themselves.

“(4) Congressional oversight—All meetings of the Council, whether or not open to the public, shall be open to the attendance by members of the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate.

“(5) Member agency meetings—Any meeting of representatives of the member agencies other than the members themselves shall be open to attendance by staff of the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate.”

(D)

changed by striking subsection (g) (relating to the nonapplicability of ~~FACA); and~~FACA);

(E)

by inserting after subsection (f) the following:

“(g) Open meeting requirement—The Council shall be an agency for purposes of section 552b of title 5, United States Code (commonly referred to as the “Government in the Sunshine Act”).

“(h) Confidential congressional briefings—At the request of the Chairman of the Committee on Financial Services of the House of Representatives or the Chairman of the Committee on Banking, Housing, and Urban Affairs of the Senate, the Chairperson shall appear before Congress to provide a confidential briefing.”

(F)

added by redesignating subsections (h) through (j) as subsections (i) through (k), respectively;

(3)

in section 112—

(A)

in subsection (a)(2)—

(i)

in subparagraph (A), by striking “direct the Office of Financial Research to”;

(ii)

by striking subparagraphs (B), (H), (I), and (J);

(iii)

by redesignating subparagraphs (C), (D), (E), (F), (G), (K), (L), (M), and (N) as subparagraphs (B), (C), (D), (E), (F), (G), (H), (I), and (J), respectively;

(iv)

in subparagraph (J), as so redesignated—

(I)

changed in clause (iii), by adding “and” at the ~~end; and~~end;

(II)

changed by striking clauses (iv) and ~~(v);~~(v); and

(III)

added by redesignating clause (vi) as clause (iv); and

(B)

in subsection (d)—

(i)

in paragraph (1), by striking “the Office of Financial Research, member agencies, and” and inserting “member agencies and”;

(ii)

in paragraph (2), by striking “the Office of Financial Research, any member agency, and” and inserting “any member agency and”;

(iii)

in paragraph (3)—

(I)

by striking “, acting through the Office of Financial Research,” each place it appears; and

(II)

in subparagraph (B), by striking “the Office of Financial Research or”; and

(iv)

in paragraph (5)(A), by striking “, the Office of Financial Research,”;

(4)

by amending section 118 to read as follows:

“118. Council funding

“There is authorized to be appropriated to the Council $4,000,000 for fiscal year 2017 and each fiscal year thereafter to carry out the duties of the Council.”

(5)

in section 163(b)(4)—

(A)

by striking “In addition” and inserting the following:

“(A) In general—In addition”

(B)

by adding at the end the following:

“(B) Exception for qualifying banking organization—Subparagraph (A) shall not apply to a proposed acquisition by a qualifying banking organization, as defined under section 105 of the Financial CHOICE Act of 2016.”

(6)

in section 165—

(A)

by striking “nonbank financial companies supervised by the Board of Governors and” each place such term appears;

(B)

by striking “nonbank financial company supervised by the Board of Governors and” each place such term appears;

(C)

in subsection (a), by amending paragraph (2) to read as follows:

“(2) Tailored application—In prescribing more stringent prudential standards under this section, the Board of Governors may differentiate among companies on an individual basis or by category, taking into consideration their capital structure, riskiness, complexity, financial activities (including the financial activities of their subsidiaries), size, and any other risk-related factors that the Board of Governors deems appropriate.”

(D)

in subsection (b)—

(i)

in paragraph (1)(B)(iv), by striking “, on its own or pursuant to a recommendation made by the Council in accordance with section 115,”;

(ii)

in paragraph (2)—

(I)

by striking “foreign nonbank financial company supervised by the Board of Governors or”;

(II)

by striking “shall—” and all that follows through “give due” and inserting “shall give due”;

(III)

in subparagraph (A), by striking “; and” and inserting a period; and

(IV)

by striking subparagraph (B);

(iii)

in paragraph (3)—

(I)

in subparagraph (A)—

(aa)

by striking clause (i);

(bb)

by redesignating clauses (ii), (iii), and (iv) as clauses (i), (ii), and (iii), respectively; and

(cc)

in clause (iii), as so redesignated, by adding “and” at the end;

(II)

by striking subparagraphs (B) and (C); and

(III)

by redesignating subparagraph (D) as subparagraph (B); and

(iv)

in paragraph (4), by striking “a nonbank financial company supervised by the Board of Governors or”;

(E)

in subsection (c)—

(i)

in paragraph (1), by striking “under section 115(c)”; and

(ii)

in paragraph (2)—

(I)

by amending subparagraph (A) to read as follows:

“(A) any recommendations of the Council;”

(II)

in subparagraph (D), by striking “nonbank financial company supervised by the Board of Governors or”;

(F)

in subsection (d)—

(i)

by striking “a nonbank financial company supervised by the Board of Governors or” each place such term appears;

(ii)

in paragraph (1), by striking “periodically” and inserting “not more often than every 2 years”;

(iii)

in paragraph (3)—

(I)

by striking “The Board” and inserting the following:

“(A) In general—The Board”

(II)

by striking “shall review” and inserting the following:

“(i) review”

(III)

by striking the period and inserting “; and”; and

(IV)

by adding at the end the following:

“(ii) not later than the end of the 6-month period beginning on the date the bank holding company submits the resolution plan, provide feedback to the bank holding company on such plan.

“(B) Disclosure of assessment framework—The Board of Governors and the Corporation shall each publicly disclose the assessment framework that is used to review information under this paragraph and shall provide the public with a notice and comment period before finalizing such assessment framework.”

(iv)

in paragraph (6), by striking “nonbank financial company supervised by the Board, any bank holding company,” and inserting “bank holding company”;

(G)

in subsection (e)—

(i)

in paragraph (1), by striking “a nonbank financial company supervised by the Board of Governors or”;

(ii)

changed in paragraph (3), by striking ~~“nonbank~~ “the nonbank financial company supervised by the Board of Governors or” each place such term appears; and

(iii)

in paragraph (4), by striking “a nonbank financial company supervised by the Board of Governors or”;

(H)

in subsection (g)(1), by striking “and any nonbank financial company supervised by the Board of Governors”;

(I)

in subsection (h)—

(i)

by striking paragraph (1);

(ii)

by redesignating paragraphs (2), (3), and (4) as paragraphs (1), (2), and (3), respectively;

(iii)

in paragraph (1), as so redesignated, by striking “paragraph (3)” each place such term appears and inserting “paragraph (2)”; and

(iv)

changed in paragraph (2), as so ~~redesignated, by striking “nonbank financial company supervised by the Board of Governors or” each place such term appears;~~redesignated—

(I)

added in subparagraph (A), by striking “the nonbank financial company supervised by the Board of Governors or bank holding company described in subsection (a), as applicable” and inserting “a bank holding company described in subsection (a)”; and

(II)

added in subparagraph (B), by striking “the nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a), as applicable” and inserting “a bank holding company described in subsection (a)”;

(J)

in subsection (i)—

(i)

in paragraph (1)—

(I)

in subparagraph (B)—

(aa)

by amending clause (i) to read as follows:

“(i) shall—

“(I) issue regulations, after providing for public notice and comment, that provide for at least 3 different sets of conditions under which the evaluation required by this subsection shall be conducted, including baseline, adverse, and severely adverse, and methodologies, including models used to estimate losses on certain assets; and

“(II) provide copies of such regulations to the Comptroller General of the United States and the Panel of Economic Advisors of the Congressional Budget Office before publishing such regulations;”

(bb)

in clause (ii), by striking “and nonbank financial companies”; and

(cc)

in clause (v), by inserting before the period the following: “, including any results of a resubmitted test”; and

(II)

by adding at the end the following:

“(C) Application to CCAR—The requirements of subparagraph (B) shall apply to all stress tests performed under the Comprehensive Capital Analysis and Review exercise established by the Board of Governors.”

(ii)

in paragraph (2)(A)—

(I)

by striking “a bank holding company” and inserting “bank holding company”; and

(II)

by striking “All other financial companies” and inserting “All other bank holding companies”;

(K)

in subsection (j)—

(i)

in paragraph (1), by striking “or a nonbank financial company supervised by the Board of Governors”; and

(ii)

in paragraph (2), by striking “the factors described in subsections (a) and (b) of section 113 and any other” and inserting “any”;

(L)

in subsection (k)(1), by striking “or nonbank financial company supervised by the Board of Governors”; and

(M)

by adding at the end the following:

“(l) Exemption for qualifying banking organizations—This section shall not apply to a proposed acquisition by a qualifying banking organization, as defined under section 105 of the Financial CHOICE Act of 2016.”

(c)

Actions to create a bank holding company— Section 3(b)(1) of the Bank Holding Company Act of 1956 (12 U.S.C. 1842(b)(1)) is amended—

(1)

by striking “Upon receiving” and inserting the following:

“(A) In general—Upon receiving”

(2)

by striking “Notwithstanding any other provision” and inserting the following:

“(B) Immediate action

“(i) In general—Notwithstanding any other provision”

(3)

by adding at the end the following:

“(ii) Exception—The Board may not take any action pursuant to clause (i) on an application that would cause any company to become a bank holding company unless such application involves the company acquiring a bank that is critically undercapitalized (as such term is defined under section 38(b) of the Federal Deposit Insurance Act).”

(d)

Concentration limits applied only to banking organizations— Section 14 of the Bank Holding Company Act of 1956 (12 U.S.C. 1852) is amended—

(1)

by striking “financial company” each place such term appears and inserting “banking organization”;

(2)

in subsection (a)—

(A)

by amending paragraph (2) to read as follows:

“(2) the term “banking organization” means—

“(A) an insured depository institution;

“(B) a bank holding company;

“(C) a savings and loan holding company;

“(D) a company that controls an insured depository institution; and

“(E) a foreign bank or company that is treated as a bank holding company for purposes of this Act; and”

(B)

in paragraph (3)—

(i)

in subparagraph (A)(ii), by adding “and” at the end;

(ii)

in subparagraph (B)(ii), by striking “; and” and inserting a period; and

(iii)

by striking subparagraph (C); and

(3)

in subsection (b), by striking “financial companies” and inserting “banking organizations”.

(e)

Conforming amendment— Section 3502(5) of title 44, United States Code, is amended by striking “the Office of Financial Research,”.

(f)

Clerical amendment— The table of contents under section 1(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act is amended by striking the items relating to subtitle B of title I and 113, 114, 115, 116, 117, 119, 120, 121, 161, 162, 164, 166, 167, 168, 170, 172, 174, and 175.

Sec. 232 Liquidation, reorganization, or recapitalization of a covered financial corporation

changed Chapter 11 of title 11, United States Code, is amended by adding at the end the ~~following:~~following (and conforming the table of contents for such chapter accordingly):

“V Liquidation, Reorganization, or Recapitalization of a Covered Financial Corporation

“1181. Inapplicability of other sections

“Sections 303 and 321(c) do not apply in a case under this subchapter concerning a covered financial corporation. Section 365 does not apply to a transfer under section 1185, 1187, or 1188.

“1182. Definitions for this subchapter

“In this subchapter, the following definitions shall apply:

“(1) The term “Board” means the Board of Governors of the Federal Reserve System.

“(2) The term “bridge company” means a newly formed corporation to which property of the estate may be transferred under section 1185(a) and the equity securities of which may be transferred to a special trustee under section 1186(a).

“(3) The term “capital structure debt” means all unsecured debt of the debtor for borrowed money for which the debtor is the primary obligor, other than a qualified financial contract and other than debt secured by a lien on property of the estate that is to be transferred to a bridge company pursuant to an order of the court under section 1185(a).

“(4) The term “contractual right” means a contractual right of a kind defined in section 555, 556, 559, 560, or 561.

“(5) The term “qualified financial contract” means any contract of a kind defined in paragraph (25), (38A), (47), or (53B) of section 101, section 741(7), or paragraph (4), (5), (11), or (13) of section 761.

“(6) The term “special trustee” means the trustee of a trust formed under section 1186(a)(1).

“1183. Commencement of a case concerning a covered financial corporation

“(a) A case under this subchapter concerning a covered financial corporation may be commenced by the filing of a petition with the court by the debtor under section 301 only if the debtor states to the best of its knowledge under penalty of perjury in the petition that it is a covered financial corporation.

“(b) The commencement of a case under subsection (a) constitutes an order for relief under this subchapter.

“(c) The members of the board of directors (or body performing similar functions) of a covered financial company shall have no liability to shareholders, creditors, or other parties in interest for a good faith filing of a petition to commence a case under this subchapter, or for any reasonable action taken in good faith in contemplation of or in connection with such a petition or a transfer under section 1185 or section 1186, whether prior to or after commencement of the case.

“(d) Counsel to the debtor shall provide, to the greatest extent practicable without disclosing the identity of the potential debtor, sufficient confidential notice to the chief judge of the court of appeals for the circuit embracing the district in which such counsel intends to file a petition to commence a case under this subchapter regarding the potential commencement of such case. The chief judge of such court shall randomly assign to preside over such case a bankruptcy judge selected from among the bankruptcy judges designated by the Chief Justice of the United States under section 298 of title 28.

“1184. Regulators

“The Board, the Securities Exchange Commission, the Office of the Comptroller of the Currency of the Department of the Treasury, the Commodity Futures Trading Commission, and the Federal Deposit Insurance Corporation may raise and may appear and be heard on any issue in any case or proceeding under this subchapter.

“1185. Special transfer of property of the estate

“(a) On request of the trustee, and after notice and a hearing that shall occur not less than 24 hours after the order for relief, the court may order a transfer under this section of property of the estate, and the assignment of executory contracts, unexpired leases, and qualified financial contracts of the debtor, to a bridge company. Upon the entry of an order approving such transfer, any property transferred, and any executory contracts, unexpired leases, and qualified financial contracts assigned under such order shall no longer be property of the estate. Except as provided under this section, the provisions of section 363 shall apply to a transfer and assignment under this section.

“(b) Unless the court orders otherwise, notice of a request for an order under subsection (a) shall consist of electronic or telephonic notice of not less than 24 hours to—

“(1) the debtor;

“(2) the holders of the 20 largest secured claims against the debtor;

“(3) the holders of the 20 largest unsecured claims against the debtor;

“(4) counterparties to any debt, executory contract, unexpired lease, and qualified financial contract requested to be transferred under this section;

“(5) the Board;

“(6) the Federal Deposit Insurance Corporation;

“(7) the Secretary of the Treasury and the Office of the Comptroller of the Currency of the Treasury;

“(8) the Commodity Futures Trading Commission;

“(9) the Securities and Exchange Commission;

“(10) the United States trustee or bankruptcy administrator; and

“(11) each primary financial regulatory agency, as defined in section 2(12) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, with respect to any affiliate the equity securities of which are proposed to be transferred under this section.

“(c) The court may not order a transfer under this section unless the court determines, based upon a preponderance of the evidence, that—

“(1) the transfer under this section is necessary to prevent serious adverse effects on financial stability in the United States;

“(2) the transfer does not provide for the assumption of any capital structure debt by the bridge company;

“(3) the transfer does not provide for the transfer to the bridge company of any property of the estate that is subject to a lien securing a debt, executory contract, unexpired lease or agreement (including a qualified financial contract) of the debtor unless—

“(A)

“(i) the bridge company assumes such debt, executory contract, unexpired lease or agreement (including a qualified financial contract), including any claims arising in respect thereof that would not be allowed secured claims under section 506(a)(1) and after giving effect to such transfer, such property remains subject to the lien securing such debt, executory contract, unexpired lease or agreement (including a qualified financial contract); and

“(ii) the court has determined that assumption of such debt, executory contract, unexpired lease or agreement (including a qualified financial contract) by the bridge company is in the best interests of the estate; or

“(B) such property is being transferred to the bridge company in accordance with the provisions of section 363;

“(4) the transfer does not provide for the assumption by the bridge company of any debt, executory contract, unexpired lease or agreement (including a qualified financial contract) of the debtor secured by a lien on property of the estate unless the transfer provides for such property to be transferred to the bridge company in accordance with paragraph (3)(A) of this subsection;

“(5) the transfer does not provide for the transfer of the equity of the debtor;

“(6) the trustee has demonstrated that the bridge company is not likely to fail to meet the obligations of any debt, executory contract, qualified financial contract, or unexpired lease assumed and assigned to the bridge company;

“(7) the transfer provides for the transfer to a special trustee all of the equity securities in the bridge company and appointment of a special trustee in accordance with section 1186;

“(8) after giving effect to the transfer, adequate provision has been made for the fees, costs, and expenses of the estate and special trustee; and

“(9) the bridge company will have governing documents, and initial directors and senior officers, that are in the best interest of creditors and the estate.

“(d) Immediately before a transfer under this section, the bridge company that is the recipient of the transfer shall—

“(1) not have any property, executory contracts, unexpired leases, qualified financial contracts, or debts, other than any property acquired or executory contracts, unexpired leases, or debts assumed when acting as a transferee of a transfer under this section; and

“(2) have equity securities that are property of the estate, which may be sold or distributed in accordance with this title.

“1186. Special trustee

“(a)

“(1) An order approving a transfer under section 1185 shall require the trustee to transfer to a qualified and independent special trustee, who is appointed by the court, all of the equity securities in the bridge company that is the recipient of a transfer under section 1185 to hold in trust for the sole benefit of the estate, subject to satisfaction of the special trustee’s fees, costs, and expenses. The trust of which the special trustee is the trustee shall be a newly formed trust governed by a trust agreement approved by the court as in the best interests of the estate, and shall exist for the sole purpose of holding and administering, and shall be permitted to dispose of, the equity securities of the bridge company in accordance with the trust agreement.

“(2) In connection with the hearing to approve a transfer under section 1185, the trustee shall confirm to the court that the Board has been consulted regarding the identity of the proposed special trustee and advise the court of the results of such consultation.

“(b) The trust agreement governing the trust shall provide—

“(1) for the payment of the fees, costs, expenses, and indemnities of the special trustee from the assets of the debtor’s estate;

“(2) that the special trustee provide—

“(A) quarterly reporting to the estate, which shall be filed with the court; and

“(B) information about the bridge company reasonably requested by a party in interest to prepare a disclosure statement for a plan providing for distribution of any securities of the bridge company if such information is necessary to prepare such disclosure statement;

“(3) that for as long as the equity securities of the bridge company are held by the trust, the special trustee shall file a notice with the court in connection with—

“(A) any change in a director or senior officer of the bridge company;

“(B) any modification to the governing documents of the bridge company; and

“(C) any material corporate action of the bridge company, including—

“(i) recapitalization;

“(ii) a material borrowing;

“(iii) termination of an intercompany debt or guarantee;

“(iv) a transfer of a substantial portion of the assets of the bridge company; or

“(v) the issuance or sale of any securities of the bridge company;

“(4) that any sale of any equity securities of the bridge company shall not be consummated until the special trustee consults with the Federal Deposit Insurance Corporation and the Board regarding such sale and discloses the results of such consultation with the court;

“(5) that, subject to reserves for payments permitted under paragraph (1) provided for in the trust agreement, the proceeds of the sale of any equity securities of the bridge company by the special trustee be held in trust for the benefit of or transferred to the estate;

“(6) the process and guidelines for the replacement of the special trustee; and

“(7) that the property held in trust by the special trustee is subject to distribution in accordance with subsection (c).

“(c)

“(1) The special trustee shall distribute the assets held in trust—

“(A) if the court confirms a plan in the case, in accordance with the plan on the effective date of the plan; or

“(B) if the case is converted to a case under chapter 7, as ordered by the court.

“(2) As soon as practicable after a final distribution under paragraph (1), the office of the special trustee shall terminate, except as may be necessary to wind up and conclude the business and financial affairs of the trust.

“(d) After a transfer to the special trustee under this section, the special trustee shall be subject only to applicable nonbankruptcy law, and the actions and conduct of the special trustee shall no longer be subject to approval by the court in the case under this subchapter.

“1187. Temporary and supplemental automatic stay; assumed debt

“(a)

“(1) A petition filed under section 1183 operates as a stay, applicable to all entities, of the termination, acceleration, or modification of any debt, contract, lease, or agreement of the kind described in paragraph (2), or of any right or obligation under any such debt, contract, lease, or agreement, solely because of—

“(A) a default by the debtor under any such debt, contract, lease, or agreement; or

“(B) a provision in such debt, contract, lease, or agreement, or in applicable nonbankruptcy law, that is conditioned on—

“(i) the insolvency or financial condition of the debtor at any time before the closing of the case;

“(ii) the commencement of a case under this title concerning the debtor;

“(iii) the appointment of or taking possession by a trustee in a case under this title concerning the debtor or by a custodian before the commencement of the case; or

“(iv) a credit rating agency rating, or absence or withdrawal of a credit rating agency rating—

“(I) of the debtor at any time after the commencement of the case;

“(II) of an affiliate during the period from the commencement of the case until 48 hours after such order is entered;

“(III) of the bridge company while the trustee or the special trustee is a direct or indirect beneficial holder of more than 50 percent of the equity securities of—

“(aa) the bridge company; or

“(bb) the affiliate, if all of the direct or indirect interests in the affiliate that are property of the estate are transferred under section 1185; or

“(IV) of an affiliate while the trustee or the special trustee is a direct or indirect beneficial holder of more than 50 percent of the equity securities of—

“(aa) the bridge company; or

“(bb) the affiliate, if all of the direct or indirect interests in the affiliate that are property of the estate are transferred under section 1185.

“(2) A debt, contract, lease, or agreement described in this paragraph is—

“(A) any debt (other than capital structure debt), executory contract, or unexpired lease of the debtor (other than a qualified financial contract);

“(B) any agreement under which the debtor issued or is obligated for debt (other than capital structure debt);

“(C) any debt, executory contract, or unexpired lease of an affiliate (other than a qualified financial contract); or

“(D) any agreement under which an affiliate issued or is obligated for debt.

“(3) The stay under this subsection terminates—

“(A) for the benefit of the debtor, upon the earliest of—

“(i) 48 hours after the commencement of the case;

“(ii) assumption of the debt, contract, lease, or agreement by the bridge company under an order authorizing a transfer under section 1185;

“(iii) a final order of the court denying the request for a transfer under section 1185; or

“(iv) the time the case is dismissed; and

“(B) for the benefit of an affiliate, upon the earliest of—

“(i) the entry of an order authorizing a transfer under section 1185 in which the direct or indirect interests in the affiliate that are property of the estate are not transferred under section 1185;

“(ii) a final order by the court denying the request for a transfer under section 1185;

“(iii) 48 hours after the commencement of the case if the court has not ordered a transfer under section 1185; or

“(iv) the time the case is dismissed.

“(4) Subsections (d), (e), (f), and (g) of section 362 apply to a stay under this subsection.

“(b) A debt, executory contract (other than a qualified financial contract), or unexpired lease of the debtor, or an agreement under which the debtor has issued or is obligated for any debt, may be assumed by a bridge company in a transfer under section 1185 notwithstanding any provision in an agreement or in applicable nonbankruptcy law that—

“(1) prohibits, restricts, or conditions the assignment of the debt, contract, lease, or agreement; or

“(2) accelerates, terminates, or modifies, or permits a party other than the debtor to terminate or modify, the debt, contract, lease, or agreement on account of—

“(A) the assignment of the debt, contract, lease, or agreement; or

“(B) a change in control of any party to the debt, contract, lease, or agreement.

“(c)

“(1) A debt, contract, lease, or agreement of the kind described in subparagraph (A) or (B) of subsection (a)(2) may not be accelerated, terminated, or modified, and any right or obligation under such debt, contract, lease, or agreement may not be accelerated, terminated, or modified, as to the bridge company solely because of a provision in the debt, contract, lease, or agreement or in applicable nonbankruptcy law—

“(A) of the kind described in subsection (a)(1)(B) as applied to the debtor;

“(B) that prohibits, restricts, or conditions the assignment of the debt, contract, lease, or agreement; or

“(C) that accelerates, terminates, or modifies, or permits a party other than the debtor to terminate or modify, the debt, contract, lease or agreement on account of—

“(i) the assignment of the debt, contract, lease, or agreement; or

“(ii) a change in control of any party to the debt, contract, lease, or agreement.

“(2) If there is a default by the debtor under a provision other than the kind described in paragraph (1) in a debt, contract, lease or agreement of the kind described in subparagraph (A) or (B) of subsection (a)(2), the bridge company may assume such debt, contract, lease, or agreement only if the bridge company—

“(A) shall cure the default;

“(B) compensates, or provides adequate assurance in connection with a transfer under section 1185 that the bridge company will promptly compensate, a party other than the debtor to the debt, contract, lease, or agreement, for any actual pecuniary loss to the party resulting from the default; and

“(C) provides adequate assurance in connection with a transfer under section 1185 of future performance under the debt, contract, lease, or agreement, as determined by the court under section 1185(c)(4).

“1188. Treatment of qualified financial contracts and affiliate contracts

“(a) Notwithstanding sections 362(b)(6), 362(b)(7), 362(b)(17), 362(b)(27), 362(o), 555, 556, 559, 560, and 561, a petition filed under section 1183 operates as a stay, during the period specified in section 1187(a)(3)(A), applicable to all entities, of the exercise of a contractual right—

“(1) to cause the modification, liquidation, termination, or acceleration of a qualified financial contract of the debtor or an affiliate;

“(2) to offset or net out any termination value, payment amount, or other transfer obligation arising under or in connection with a qualified financial contract of the debtor or an affiliate; or

“(3) under any security agreement or arrangement or other credit enhancement forming a part of or related to a qualified financial contract of the debtor or an affiliate.

“(b)

“(1) During the period specified in section 1187(a)(3)(A), the trustee or the affiliate shall perform all payment and delivery obligations under such qualified financial contract of the debtor or the affiliate, as the case may be, that become due after the commencement of the case. The stay provided under subsection (a) terminates as to a qualified financial contract of the debtor or an affiliate immediately upon the failure of the trustee or the affiliate, as the case may be, to perform any such obligation during such period.

“(2) Any failure by a counterparty to any qualified financial contract of the debtor or any affiliate to perform any payment or delivery obligation under such qualified financial contract, including during the pendency of the stay provided under subsection (a), shall constitute a breach of such qualified financial contract by the counterparty.

“(c) Subject to the court’s approval, a qualified financial contract between an entity and the debtor may be assigned to or assumed by the bridge company in a transfer under, and in accordance with, section 1185 if and only if—

“(1) all qualified financial contracts between the entity and the debtor are assigned to and assumed by the bridge company in the transfer under section 1185;

“(2) all claims of the entity against the debtor in respect of any qualified financial contract between the entity and the debtor (other than any claim that, under the terms of the qualified financial contract, is subordinated to the claims of general unsecured creditors) are assigned to and assumed by the bridge company;

“(3) all claims of the debtor against the entity under any qualified financial contract between the entity and the debtor are assigned to and assumed by the bridge company; and

“(4) all property securing or any other credit enhancement furnished by the debtor for any qualified financial contract described in paragraph (1) or any claim described in paragraph (2) or (3) under any qualified financial contract between the entity and the debtor is assigned to and assumed by the bridge company.

“(d) Notwithstanding any provision of a qualified financial contract or of applicable nonbankruptcy law, a qualified financial contract of the debtor that is assumed or assigned in a transfer under section 1185 may not be accelerated, terminated, or modified, after the entry of the order approving a transfer under section 1185, and any right or obligation under the qualified financial contract may not be accelerated, terminated, or modified, after the entry of the order approving a transfer under section 1185 solely because of a condition described in section 1187(c)(1), other than a condition of the kind specified in section 1187(b) that occurs after property of the estate no longer includes a direct beneficial interest or an indirect beneficial interest through the special trustee, in more than 50 percent of the equity securities of the bridge company.

“(e) Notwithstanding any provision of any agreement or in applicable nonbankruptcy law, an agreement of an affiliate (including an executory contract, an unexpired lease, qualified financial contract, or an agreement under which the affiliate issued or is obligated for debt) and any right or obligation under such agreement may not be accelerated, terminated, or modified, solely because of a condition described in section 1187(c)(1), other than a condition of the kind specified in section 1187(b) that occurs after the bridge company is no longer a direct or indirect beneficial holder of more than 50 percent of the equity securities of the affiliate, at any time after the commencement of the case if—

“(1) all direct or indirect interests in the affiliate that are property of the estate are transferred under section 1185 to the bridge company within the period specified in subsection (a);

“(2) the bridge company assumes—

“(A) any guarantee or other credit enhancement issued by the debtor relating to the agreement of the affiliate; and

“(B) any obligations in respect of rights of setoff, netting arrangement, or debt of the debtor that directly arises out of or directly relates to the guarantee or credit enhancement; and

“(3) any property of the estate that directly serves as collateral for the guarantee or credit enhancement is transferred to the bridge company.

“1189. Licenses, permits, and registrations

“(a) Notwithstanding any otherwise applicable nonbankruptcy law, if a request is made under section 1185 for a transfer of property of the estate, any Federal, State, or local license, permit, or registration that the debtor or an affiliate had immediately before the commencement of the case and that is proposed to be transferred under section 1185 may not be accelerated, terminated, or modified at any time after the request solely on account of—

“(1) the insolvency or financial condition of the debtor at any time before the closing of the case;

“(2) the commencement of a case under this title concerning the debtor;

“(3) the appointment of or taking possession by a trustee in a case under this title concerning the debtor or by a custodian before the commencement of the case; or

“(4) a transfer under section 1185.

“(b) Notwithstanding any otherwise applicable nonbankruptcy law, any Federal, State, or local license, permit, or registration that the debtor had immediately before the commencement of the case that is included in a transfer under section 1185 shall be valid and all rights and obligations thereunder shall vest in the bridge company.

“1190. Exemption from securities laws

“For purposes of section 1145, a security of the bridge company shall be deemed to be a security of a successor to the debtor under a plan if the court approves the disclosure statement for the plan as providing adequate information (as defined in section 1125(a)) about the bridge company and the security.

“1191. Inapplicability of certain avoiding powers

“A transfer made or an obligation incurred by the debtor to an affiliate prior to or after the commencement of the case, including any obligation released by the debtor or the estate to or for the benefit of an affiliate, in contemplation of or in connection with a transfer under section 1185 is not avoidable under section 544, 547, 548(a)(1)(B), or 549, or under any similar nonbankruptcy law.

“1192. Consideration of financial stability

“The court may consider the effect that any decision in connection with this subchapter may have on financial stability in the United States.”

Sec. 311 Consumer Financial Opportunity Commission

(a)

Making the Bureau an independent Consumer Financial Opportunity Commission— The Consumer Financial Protection Act of 2010 (12 U.S.C. 5481 et seq.) is amended—

(1)

in section 1011—

(A)

added in the heading of such section, by striking “BUREAU OF CONSUMER FINANCIAL PROTECTION” and inserting “CONSUMER FINANCIAL OPPORTUNITY COMMISSION”;

(B)

renumbered was (2)(3)(2) in subsection (a)—

(i)

added in the heading of such subsection, by striking “Bureau” and inserting “Commission”;

(ii)

renumbered was (2)(3)(2)(2) by striking “in the Federal Reserve System,”;

(iii)

renumbered was (2)(3)(2)(3) by striking “independent bureau” and inserting “independent commission”;

(iv)

renumbered was (2)(3)(2)(4) by striking “Bureau of Consumer Financial Protection” and inserting “Consumer Financial Opportunity Commission (hereinafter in this section referred to as the “Commission”)”; and

(v)

renumbered was (2)(3)(2)(5) by striking “Bureau” each place such term appears and inserting “Commission”;

(C)

renumbered was (2)(3)(3) by striking subsections (b), (c), and (d);

(D)

renumbered was (2)(3)(4) by redesignating subsection (e) as subsection (h);

(E)

renumbered was (2)(3)(5) in subsection (h), as so redesignated—

(i)

renumbered was (2)(3)(5)(2) by striking “, including in cities in which the Federal reserve banks, or branches of such banks, are located,”; and

(ii)

renumbered was (2)(3)(5)(3) by striking “Bureau” each place such term appears and inserting “Commission”; and

(F)

renumbered was (2)(3)(6) by inserting after subsection (a) the following new subsections:

“(b) Composition of the Commission

“(1) In general—The Commission shall be composed of 5 members who shall be appointed by the President, by and with the advice and consent of the Senate, from among individuals who—

“(A) are citizens of the United States; and

“(B) have strong competencies and experiences related to consumer financial products and services.

“(2) Staggering—The members of the Commission shall serve staggered terms, which initially shall be established by the President for terms of 1, 2, 3, 4, and 5 years, respectively.

“(3) Terms

“(A) In general—Each member of the Commission, including the Chair, shall serve for a term of 5 years.

“(B) Removal—The President may remove any member of the Commission for inefficiency, neglect of duty, or malfeasance in office.

“(C) Vacancies—Any member of the Commission appointed to fill a vacancy occurring before the expiration of the term to which that member’s predecessor was appointed (including the Chair) shall be appointed only for the remainder of the term.

“(D) Continuation of service—Each member of the Commission may continue to serve after the expiration of the term of office to which that member was appointed until a successor has been appointed by the President and confirmed by the Senate, except that a member may not continue to serve more than 1 year after the date on which that member’s term would otherwise expire.

“(E) Other employment prohibited—No member of the Commission shall engage in any other business, vocation, or employment.

“(c) Affiliation—Not more than 3 members of the Commission shall be members of any one political party.

“(d) Chair of the Commission

“(1) Appointment—The Chair of the Commission shall be appointed by the President from among the members of the Commission.

“(2) Authority—The Chair shall be the principal executive officer of the Commission, and shall exercise all of the executive and administrative functions of the Commission, including with respect to—

“(A) the appointment and supervision of personnel employed under the Commission (other than personnel employed regularly and full time in the immediate offices of members of the Commission other than the Chair);

“(B) the distribution of business among personnel appointed and supervised by the Chair and among administrative units of the Commission; and

“(C) the use and expenditure of funds.

“(3) Limitation—In carrying out any of the Chair’s functions under the provisions of this subsection the Chair shall be governed by general policies of the Commission and by such regulatory decisions, findings, and determinations as the Commission may by law be authorized to make.

“(4) Requests or estimates related to appropriations—Requests or estimates for regular, supplemental, or deficiency appropriations on behalf of the Commission may not be submitted by the Chair without the prior approval of the Commission.

“(e) No impairment by reason of vacancies—No vacancy in the members of the Commission shall impair the right of the remaining members of the Commission to exercise all the powers of the Commission. Three members of the Commission shall constitute a quorum for the transaction of business, except that if there are only 3 members serving on the Commission because of vacancies in the Commission, 2 members of the Commission shall constitute a quorum for the transaction of business. If there are only 2 members serving on the Commission because of vacancies in the Commission, 2 members shall constitute a quorum for the 6-month period beginning on the date of the vacancy which caused the number of Commission members to decline to 2.

“(f) Seal—The Commission shall have an official seal.

“(g) Compensation

“(1) Chair—The Chair shall receive compensation at the rate prescribed for level I of the Executive Schedule under section 5313 of title 5, United States Code.

“(2) Other members of the Commission—The 4 other members of the Commission shall each receive compensation at the rate prescribed for level II of the Executive Schedule under section 5314 of title 5, United States Code.”

(2)

in section 1012(c), by striking paragraphs (2), (3), (4), and (5); and

(3)

in section 1014(b), by striking “Not fewer than 6 members shall be appointed upon the recommendation of the regional Federal Reserve Bank Presidents, on a rotating basis.”.

(b)

Deeming of name— Any reference in a law, regulation, document, paper, or other record of the United States to the Bureau of Consumer Financial Protection shall be deemed a reference to the Consumer Financial Opportunity Commission.

(c)

Conforming amendments—

(1)

Consumer Financial Protection Act of 2010—

(A)

added Replacement of references to Director—

(i)

added In general— Except as provided under clause (ii) and subparagraph (B), the Consumer Financial Protection Act of 2010 (12 U.S.C. 5481 et seq.) is amended—

(I)

added by striking “Director of the Bureau” each place such term appears and inserting “Consumer Financial Opportunity Commission”;

(II)

added by striking “Director” each place such term appears and inserting “Consumer Financial Opportunity Commission”; and

(A)

removed ~~In general—~~ ~~Except as provided under subparagraph (B), the Consumer Financial Protection Act of 2010 (12 U.S.C. 5481 et seq.) is amended—~~

(i)

removed by striking “Director of the Bureau” each place such term appears, other than where such term is used to refer to a Director other than the Director of the Bureau of Consumer Financial Protection, and inserting “Consumer Financial Opportunity Commission”;

(ii)

removed by striking “Director” each place such term appears and inserting “Consumer Financial Opportunity Commission”, other than where such term is used to refer to a Director other than the Director of the Bureau of Consumer Financial Protection; and

(III)

renumbered was (4)(2)(2)(5) in section 1002, by striking paragraph (10).

(ii)

added Exceptions— The amendments described under clause (i) shall not apply to the following provisions of the Consumer Financial Protection Act of 2010:

(I)

added Paragraphs (5) and (6) of section 1013(d).

(II)

added The second instance of “Director” under section 1017(a)(1), as redesignated by section 312.

(III)

added Section 1043.

(IV)

added Section 1061(b)(3).

(V)

added Subsections (a)(1) and (b)(1) of section 1062.

(VI)

added Section 1063(f).

(VII)

added Subsection (a)(5)(A) and subparagraphs (E) and (G)(iii) of subsection (i)(2) of section 1064.

(VIII)

added Section 1065(a).

(B)

Exceptions— The Consumer Financial Protection Act of 2010 (12 U.S.C. 5481 et seq.) is amended—

(i)

in section 1013(c)(3)—

(I)

by striking “Assistant Director of the Bureau for” and inserting “Head of the Office of”; and

(II)

in subparagraph (B), by striking “Assistant Director” and inserting “Head of the Office”;

(ii)

in section 1013(g)(2)—

(I)

by striking “Assistant director” and inserting “Head of the Office”; and

(II)

by striking “an assistant director” and inserting “a Head of the Office of Financial Protection for Older Americans”;

(iii)

in section 1016(a), by striking “Director of the Bureau” and inserting “Chair of the Consumer Financial Opportunity Commission”; and

(iv)

added in section 1027(l)(1), by striking “Director and the Bureau” and inserting “Chair of the Consumer Financial Opportunity Commission and the Consumer Financial Opportunity Commission”; and

(v)

renumbered was (4)(2)(3)(6) in section 1066(a), by striking “Director of the Bureau is” and inserting “first member of the Commission is”.

(2)

changed Dodd-Frank Wall Street Reform and Consumer Protection Act— ~~Section 1447 of the~~ The Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. ~~1701p-2)~~ 5301 et seq.) is ~~amended by striking “Director of the Bureau” each place such term appears and inserting “Consumer Financial Opportunity Commission”.~~amended—

(A)

added in the item relating to section 1011 in table of contents in section 1(b) of such Act, by striking “Bureau of Consumer Financial Protection” and inserting “Consumer Financial Opportunity Commission”; and

(B)

added in section 1447, by striking “Director of the Bureau” each place such term appears and inserting “Consumer Financial Opportunity Commission”.

(3)

Expedited Funds Availability Act— The Expedited Funds Availability Act (12 U.S.C. 4001 et seq.), as amended by section 1086 of the Consumer Financial Protection Act of 2010, is amended by striking “Director of the Bureau” each place such term appears and inserting “Consumer Financial Opportunity Commission”.

(4)

removed ~~Federal Deposit Insurance Act—~~ Section 2 of the Federal Deposit Insurance Act (12 U.S.C. 1812), as amended by section 336(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, is amended by striking “Director of the Consumer Financial Protection Bureau” each place such term appears and inserting “Chair of the Consumer Financial Opportunity Commission”.

(4)

renumbered was (4)(6) Federal Financial Institutions Examination Council Act of 1978— Section 1004(a)(4) of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3303(a)(4)), as amended by section 1091 of the Consumer Financial Protection Act of 2010, is amended by striking “Director of the Consumer Financial Protection Bureau” and inserting “Chair of the Consumer Financial Opportunity Commission”.

(5)

added Financial Literacy and Education Improvement Act— Section 513 of the Financial Literacy and Education Improvement Act (20 U.S.C. 9702), as amended by section 1013(d)(5) of the Consumer Financial Protection Act of 2010, is amended by striking “Director of the Bureau of Consumer Financial Protection” each place such term appears and inserting “Chair of the Consumer Financial Opportunity Commission”.

(6)

removed ~~Financial Literacy and Education Improvement Act—~~ Section 513 of the Financial Literacy and Education Improvement Act (20 U.S.C. 9702), as amended by section 1013(d)(5) of the Consumer Financial Protection Act of 2010, is amended by striking “Director” each place such term appears and inserting “Chair of the Consumer Financial Opportunity Commission”.

(6)

renumbered was (4)(8) Home Mortgage Disclosure Act of 1975— Section 307 of the Home Mortgage Disclosure Act of 1975, as amended by section 1094(6) of the Consumer Financial Protection Act of 2010, is amended by striking “Director of the Bureau of Consumer Financial Protection” each place such term appears and inserting “Consumer Financial Opportunity Commission”.

(7)

renumbered was (4)(9) Interstate Land Sales Full Disclosure Act— The Interstate Land Sales Full Disclosure Act, as amended by section 1098A of the Consumer Financial Protection Act of 2010, is amended—

(A)

renumbered was (4)(9)(3) by amending section 1402(1) to read as follows:

“(1) “Chair” means the Chair of the Consumer Financial Opportunity Commission;”

(B)

renumbered was (4)(9)(4) in section 1416(a), by striking “Director of the Bureau of Consumer Financial Protection” and inserting “Chair”.

(8)

renumbered was (4)(10) Real Estate Settlement Procedures Act of 1974— Section 5 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2604), as amended by section 1450 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, is amended—

(A)

added by striking “The Director of the Bureau of Consumer Financial Protection (hereafter in this section referred to as the “Director”)” and inserting “The Consumer Financial Opportunity Commission”;

(B)

added by striking “Director” each place such term appears and inserting “Consumer Financial Opportunity Commission”; and

(C)

added by striking “Director” each place such term appears and inserting “Chair”.

(A)

removed by striking “The Director of the Bureau of Consumer Financial Protection (hereafter in this section referred to as the “Director”)” and inserting “The Consumer Financial Opportunity Commission”; and

(B)

removed ~~by striking “Director” each place such term appears and inserting “Consumer Financial Opportunity Commission”.~~

(9)

renumbered was (4)(11) S.A.F.E. Mortgage Licensing Act of 2008— The S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C. 5101 et seq.), as amended by section 1100 of the Consumer Financial Protection Act of 2010, is amended—

(A)

added by striking “Director” each place such term appears in headings and text and inserting “Consumer Financial Opportunity Commission”; and

(A)

removed by striking “Director” each place such term appears in headings and text, other than where such term is used in the context of the Director of the Office of Thrift Supervision, and inserting “Consumer Financial Opportunity Commission”; and

(B)

renumbered was (4)(11)(4) in section 1503, by striking paragraph (10).

(10)

renumbered was (4)(12) Title 44, United States Code— Section 3513(c) of title 44, United States Code, as amended by section 1100D(b) of the Consumer Financial Protection Act of 2010, is amended by striking “Director of the Bureau” and inserting “Consumer Financial Opportunity Commission”.

Sec. 313 Consumer Financial Opportunity Commission Inspector General Reform

(a)

Appointment of Inspector General— The Inspector General Act of 1978 (5 U.S.C. App.) is amended—

(1)

in section 8G—

(A)

in subsection (a)(2), by striking “and the Bureau of Consumer Financial Protection”;

(B)

in subsection (c), by striking “For purposes of implementing this section” and all that follows through the end of the subsection; and

(C)

in subsection (g)(3), by striking “and the Bureau of Consumer Financial Protection”; and

(2)

in section 12—

(A)

in paragraph (1), by inserting “the Consumer Financial Opportunity Commission;” after “the President of the Export-Import Bank;”; and

(B)

in paragraph (2), by inserting “the Consumer Financial Opportunity Commission,” after “the Export-Import Bank,”.

(b)

Requirements for the Inspector General for the Consumer Financial Opportunity Commission—

(1)

changed Establishment— Section 1011 of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5491), as amended by section 311, is further ~~amended—~~amended by adding at the end the following:

(A)

removed ~~by adding at the end the following:~~

“(i) Inspector General—There is established the position of the Inspector General of the Commission.”

(B)

removed ~~in subsection (d), by striking “or Deputy Director” each place such term appears and inserting “, Deputy Director, or Inspector General”.~~

(2)

Hearings— Section 1016 of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5496) is amended by inserting after subsection (c) the following:

“(d) Additional Requirement for Inspector General—On a separate occasion from that described in subsection (a), the Inspector General of the Commission shall appear, upon invitation, before the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services and the Committee on Energy and Commerce of the House of Representatives at semi-annual hearings regarding the reports required under subsection (b) and the reports required under section 5 of the Inspector General Act of 1978 (5 U.S.C. App.).”

(3)

Participation in the Council of Inspectors General on Financial Oversight— Section 989E(a)(1) of the Dodd-Frank Wall Street Reform and Consumer Protection Act is amended by adding at the end the following:

“(J) The Consumer Financial Opportunity Commission.”

(4)

Deadline for appointment— Not later than 60 days after the date of the enactment of this Act, the President shall appoint an Inspector General for the Consumer Financial Opportunity Commission in accordance with section 3 of the Inspector General Act of 1978 (5 U.S.C. App.).

(c)

Transition period— The Inspector General of the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection shall serve in that position until the confirmation of an Inspector General for the Consumer Financial Opportunity Commission. At that time, the Inspector General of the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection shall become the Inspector General of the Board of Governors of the Federal Reserve System.

Sec. 316 Commission dual mandate and economic analysis

(a)

Purpose— Section 1021(a) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5511(a)) is amended—

(1)

by striking “fair, transparent, and competitive” and inserting: “fair and transparent”; and

(2)

by adding at the end the following: “In addition, the Commission shall seek to implement and, where applicable, enforce Federal consumer financial law consistently for the purpose of strengthening participation in markets by covered persons, without Government interference or subsidies, to increase competition and enhance consumer choice.”; and

(b)

Office of Economic Analysis—

(1)

In general— Section 1013 of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5493) is amended by adding at the end the following:

changed ~~“(h)~~ “(i) Office of Economic Analysis

“(1) Establishment—The Chair shall establish an Office of Economic Analysis.

“(2) Review and assessment of proposed rules and regulations—The Office of Economic Analysis shall—

“(A) review all proposed rules and regulations of the Commission;

“(B) assess the impact of such rules and regulations on consumer choice, price, and access to credit products; and

“(C) publish a report on such reviews and assessments in the Federal Register.

“(3) Measuring existing rules and regulations—The Office of Economic Analysis shall—

“(A) review each rule and regulation issued by the Commission after 1, 2, 5, and 10 years;

“(B) measure the rule or regulation’s success in solving the problem that the rule or regulation was intended to solve when issued; and

“(C) publish a report on such review and measurement in the Federal Register.”

(2)

Consideration of review and assessment; rulemaking requirements— Section 1022(b) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5512(b)) is amended by adding at the end the following:

“(5) Consideration of review and assessment by the Office of Economic Analysis

“(A) In general—Before issuing any rule or regulation, the Chair shall consider the review and assessment of such rule or regulation carried out by the Office of Economic Analysis.

“(B) Notice of disagreement—If a member of the Commission disagrees with any part of a review and assessment described under subparagraph (A) with respect to any rule or regulation, the member shall accompany any such rule or regulation with a statement explaining why the member so disagrees.

“(6) Identification of problems and metrics for judging success

“(A) In general—The Chair shall, in each proposed rulemaking of the Commission—

“(i) identify the problem that the particular rule or regulations is seeking to solve; and

“(ii) specify the metrics by which the Commission will measure the success of the rule or regulation in solving such problem.

“(B) Required metrics—The metrics specified under subparagraph (A)(ii) shall include a measurement of changes to consumer access to, and cost of, consumer financial products and services.”

(c)

Avoidance of duplicative or unnecessary analyses— The Commission may perform any of the analyses required by this section in conjunction with, or as part of, any other agenda or analysis required by any other provision of law, if such other agenda or analysis satisfies the provisions of this section.

Sec. 323 Reform of Consumer Financial Civil Penalty Fund

(a)

Segregated Accounts— Section 1017(b) of the Consumer Financial Protection Act of 2010, as redesignated by section 312, is amended by redesignating paragraph (2) as paragraph (3), and by inserting after paragraph (1) the following new paragraph:

“(2) Segregated Accounts in Civil Penalty Fund

“(A) In General—The Commission shall establish and maintain a segregated account in the Civil Penalty Fund each time the Commission obtains a civil penalty against any person in any judicial or administrative action under Federal consumer financial laws.

“(B) Deposits in Segregated Accounts—The Commission shall deposit each civil penalty collected into the segregated account established for such penalty under subparagraph (A).”

(b)

Payment to Victims— Paragraph (3) of section 1017(b) of such Act, as redesignated by subsection (a), is amended to read as follows:

“(3) Payment to Victims

“(A) In General

“(i) Identification of Class—Not later than 60 days after the date of deposit of amounts in a segregated account in the Civil Penalty Fund, the Commission shall identify the class of victims of the violation of Federal consumer financial laws for which such amounts were collected and deposited under paragraph (2).

“(ii) Payments—The Commission, within 2 years after the date on which such class of victims is identified, shall locate and make payments from such amounts to each victim.

“(B) Funds Deposited in Treasury

“(i) In General—The Commission shall deposit into the general fund of the Treasury any amounts remaining in a segregated account in the Civil Penalty Fund at the end of the 2-year period for payments to victims under subparagraph (A).

“(ii) Impossible or Impractical Payments—If the Commission determines before the end of the 2-year period for payments to victims under subparagraph (A) that such victims cannot be located or payments to such victims are otherwise not practicable, the Commission shall deposit into the general fund of the Treasury the amounts in the segregated account in the Civil Penalty Fund.”

(c)

added Effective Date—

(c)

removed ~~Conforming Amendment—~~ ~~Paragraph (1) of such section 1017(b) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5497(d)(1)) is amended by striking the last sentence.~~

(d)

removed ~~Effective Date—~~

(1)

renumbered was (5)(2) In General— The amendments made by this section shall apply with respect to civil penalties collected after the date of enactment of this Act.

(2)

renumbered was (5)(3) Amounts in Consumer Financial Civil Penalty Fund on Date of Enactment— With respect to amounts in the Consumer Financial Civil Penalty Fund on the date of enactment of this Act that were not allocated for consumer education and financial literacy programs on or before September 30, 2015, the Consumer Financial Opportunity Commission shall separate such amounts into segregated accounts in accordance with, and for purposes of, section 1017(d) of the Consumer Financial Protection Act of 2010, as amended by this section. The date of deposit of such amounts shall be deemed to be the date of enactment of this Act.

Sec. 324 Commission research paper transparency

Section 1013 of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5493), as amended by section 316, is further amended by adding at the end the following:

changed ~~“(i)~~ “(j) Research paper transparency—Any time the Commission, either through the research unit established by the Chair under subsection (b)(1) or otherwise, issues a research paper that is available to the public, the Commission shall accompany such paper with all studies, data, and other analyses on which the paper was based.”

Sec. 332 Repeal of Council authority to set aside Bureau rules and requirement of safety and soundness considerations when issuing rules

(a)

Repeal of authority—

(1)

In general— Section 1023 of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5513) is hereby repealed.

(2)

changed Conforming amendment— Section 1022(b)(2)(C) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5512(b)(2)(C)) is amended by striking “, except that nothing in this clause shall be construed as altering or limiting the procedures under section 1023 that may apply to any rule prescribed by the ~~Bureau of Consumer Financial Protection”.~~Bureau”.

(3)

Clerical amendment— The table of contents under section 1(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act is amended by striking the item relating to section 1023.

(b)

Safety and soundness check— Section 1022(b)(2)(A) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5512(b)(2)(A)) is amended—

(1)

in clause (i), by striking “and” at the end;

(2)

in clause (ii), by adding “and” at the end; and

(3)

by adding at the end the following:

“(iii) the impact of such rule on the financial safety or soundness of an insured depository institution;”

Sec. 404 Fees to offset appropriations

(a)

Section 31 of the Securities Exchange Act of 1934— Section 31 of the Securities Exchange Act of 1934 (15 U.S.C. 78ee) is amended—

(1)

by striking subsection (a) and inserting the following:

“(a) Collection—The Commission shall, in accordance with this section, collect transaction fees and assessments.”

(2)

in subsection (i)—

(A)

in paragraph (1)(A), by inserting “except as provided in paragraph (2),” before “shall”; and

(B)

by striking paragraph (2) and inserting the following:

“(2) General Revenue—Any fees collected for a fiscal year pursuant to this section, sections 13(e) and 14(g) of this title, and section 6(b) of the Securities Act of 1933 in excess of the amount provided in appropriation Acts for collection for such fiscal year pursuant to such sections shall be deposited and credited as general revenue of the Treasury.”

(3)

in subsection (j)—

(A)

by striking “the regular appropriation to the Commission by Congress for such fiscal year” each place it appears and inserting “the target offsetting collection amount for such fiscal year”; and

(B)

in paragraph (2), by striking “subsection (l)” and inserting “subsection (l)(2)”; and

(4)

by striking subsection (l) and inserting the following:

“(l) Definitions—For purposes of this section:

“(1) Target offsetting collection amount—The target offsetting collection amount for a fiscal year is—

“(A) for fiscal year 2017, $1,400,000,000; and

“(B) for each succeeding fiscal year, the target offsetting collection amount for the prior fiscal year, adjusted by the rate of inflation.

“(2) Baseline estimate of the aggregate dollar amount of sales—The baseline estimate of the aggregate dollar amount of sales for any fiscal year is the baseline estimate of the aggregate dollar amount of sales of securities (other than bonds, debentures, other evidences of indebtedness, security futures products, and options on securities indexes (excluding a narrow-based security index)) to be transacted on each national securities exchange and by or through any member of each national securities association (otherwise than on a national securities exchange) during such fiscal year as determined by the Commission, after consultation with the Congressional Budget Office and the Office of Management and Budget, using the methodology required for making projections pursuant to section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985.”

(b)

Section 6(b) of the Securities Act of 1933— Section 6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)) is amended—

(1)

by striking “target fee collection amount” each place it appears and inserting “target offsetting collection amount”;

(2)

in paragraph (4), by striking the last sentence and inserting the following:

“(A) the first day of the fiscal year to which such rate applies; or

“(B) five days after the date on which a regular appropriation to the Commission for such fiscal year is enacted.”

(3)

in paragraph (5), by inserting “of the Securities Exchange Act of 1934” after “sections 13(e) and 14(g)”;

(4)

by redesignating paragraph (6) as paragraph (8);

(5)

by inserting after paragraph (5) the following:

“(6) Offsetting collections—Fees collected pursuant to this subsection for any fiscal year—

“(A) except as provided in section 31(i)(2) of the Securities Exchange Act of 1934, shall be deposited and credited as offsetting collections to the account providing appropriations to the Commission; and

“(B) except as provided in paragraph (7), shall not be collected for any fiscal year except to the extent provided in advance in appropriation Acts.

“(7) Lapse of appropriation—If on the first day of a fiscal year a regular appropriation to the Commission has not been enacted, the Commission shall continue to collect fees (as offsetting collections) under this subsection at the rate in effect during the preceding fiscal year, until 5 days after the date such a regular appropriation is enacted.”

(6)

changed in subparagraph (A) of paragraph (8) (as so ~~redesignated), by striking the heading of subparagraph (A) and inserting “Target offsetting collection amount.—”.~~redesignated)—

(A)

added by striking the subparagraph heading and inserting “Target offsetting collection amount.—”; and

(B)

added in the heading of the right column of the table, by striking “fee” and inserting “offsetting”.

(c)

Section 13(e) of the Securities Exchange Act of 1934— Section 13(e) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(e)) is amended—

(1)

by striking paragraph (5) and inserting the following:

“(5) Offsetting collections—Fees collected pursuant to this subsection for any fiscal year—

“(A) except as provided in section 31(i)(2), shall be deposited and credited as offsetting collections to the account providing appropriations to the Commission; and

“(B) except as provided in paragraph (8), shall not be collected for any fiscal year except to the extent provided in advance in appropriations Acts.”

(2)

by adding at the end the following:

“(8) Lapse of appropriation—If on the first day of a fiscal year a regular appropriation to the Commission has not been enacted, the Commission shall continue to collect fees (as offsetting collections) under this subsection at the rate in effect during the preceding fiscal year, until 5 days after the date such a regular appropriation is enacted.”

(d)

Section 14(g) of the Securities Exchange Act of 1934— Section 14(g) of the Securities Exchange Act of 1934 (15 U.S.C. 78n(g)) is amended—

(1)

by striking paragraph (5) and inserting the following:

“(5) Offsetting collections—Fees collected pursuant to this subsection for any fiscal year—

“(A) except as provided in section 31(i)(2), shall be deposited and credited as offsetting collections to the account providing appropriations to the Commission; and

“(B) except as provided in paragraph (8), shall not be collected for any fiscal year except to the extent provided in advance in appropriations Acts.”

(2)

by redesignating paragraph (8) as paragraph (9); and

(3)

by inserting after paragraph (7) the following:

(e)

Effective date— The amendments made by this section—

(1)

shall apply beginning on October 1, 2016, except that for fiscal year 2017, the Securities and Exchange Commission shall publish—

(A)

the rates established under section 31 of the Securities Exchange Act of 1934, as amended by this section, not later than 30 days after the date on which an Act making a regular appropriation to the Commission for fiscal year 2017 is enacted; and

(B)

the rate established under section 6(b) of the Securities Act of 1933, as amended by this section, not later than August 31, 2016; and

(2)

shall not apply with respect to fees for any fiscal year before fiscal year 2017.

Sec. 411 Internal risk controls

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended—

(1)

by inserting after section 4G, as added by this Act, the following:

“4H. Internal risk controls

“The Commission, in consultation with the Chief Economist, shall develop comprehensive internal risk control mechanisms to safeguard and govern the storage of all market data by the Commission, all market data sharing agreements of the Commission, and all academic research performed at the Commission using market data.”

(2)

added in section 3(a), by redesignating the second paragraph (80) (relating to funding portals) as paragraph (81); and

(3)

renumbered was (4) in section 3(a), by adding at the end the following:

added “(82) Chief Economist—The term “Chief Economist” means the Director of the Division of Economic and Risk Analysis, or an employee of the Commission with comparable authority, as determined by the Commission.”

removed “(81) Chief Economist—The term “Chief Economist” means the Director of the Division of Economic and Risk Analysis, or an employee of the Commission with comparable authority, as determined by the Commission.”

Sec. 421 Subpoena duration and renewal

Section 21(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78u(b)) is amended—

(1)

changed by inserting ~~“Subpoena.— ” after~~ “Subpoena.—”after the enumerator;

(2)

by striking “For the purpose of” and inserting the following:

“(1) In general—For the purpose of”

(3)

by adding at the end the following:

“(2) Omnibus orders of investigation

“(A) Duration and renewal—An omnibus order of investigation shall not be for an indefinite duration and may be renewed only by Commission action.

“(B) Definition—In paragraph (A), the term “omnibus order of investigation” means an order of the Commission authorizing 1 of more members of the Commission or its staff to issue subpoenas under paragraph (1) to multiple persons in relation to a particular subject matter area.”

Sec. 442 Exemption from risk retention requirements for nonresidential mortgage

(a)

In general— Section 15G of the Securities Exchange Act of 1934 (15 U.S.C. 78o–11) is amended—

(1)

in subsection (a)—

(A)

in paragraph (3)(B), by striking “and” at the end;

(B)

in paragraph (4)(B), by striking the period and inserting “; and”; and

(C)

by adding at the end the following:

“(5) the term “asset-backed security” refers only to an asset-backed security that is comprised wholly of residential mortgages.”

(2)

in subsection (b)—

(A)

by striking paragraph (1); and

(B)

changed by striking “(2) Residential ~~mortgages”;~~mortgages.—”;

(3)

by striking subsection (h) and redesignating subsection (i) as subsection (h); and

(4)

in subsection (h) (as so redesignated)—

(A)

by striking “effective—” and all that follows through “(1) with respect to” and inserting “effective with respect to”;

(B)

in paragraph (1), by striking “; and” and inserting a period; and

(C)

by striking paragraph (2).

(b)

Conforming amendment— Section 941 of the Dodd-Frank Wall Street Reform and Consumer Protection Act is amended by striking subsection (c).

Sec. 452 Definition of accredited investor

(a)

In general— Section 2(a)(15) of the Securities Act of 1933 (15 U.S.C. 77b(a)(15)) is amended—

(1)

by redesignating clauses (i) and (ii) as subparagraphs (A) and (F), respectively; and

(2)

changed in subparagraph (A) (as so redesignated), by striking “; or” at the end and inserting a semicolon, and inserting after such subparagraph the following:

“(B) any natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000 (which amount, along with the amounts set forth in subparagraph (C), shall be adjusted for inflation by the Commission every 5 years to the nearest $10,000 to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics) where, for purposes of calculating net worth under this subparagraph—

“(i) the person’s primary residence shall not be included as an asset;

“(ii) indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and

“(iii) indebtedness that is secured by the person's primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability;

“(C) any natural person who had an individual income in excess of $200,000 in each of the 2 most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

“(D) any natural person who is currently licensed or registered as a broker or investment adviser by the Commission, the Financial Industry Regulatory Authority, or an equivalent self-regulatory organization (as defined in section 3(a)(26) of the Securities Exchange Act of 1934), or the securities division of a State or the equivalent State division responsible for licensing or registration of individuals in connection with securities activities;

“(E) any natural person the Commission determines, by regulation, to have demonstrable education or job experience to qualify such person as having professional knowledge of a subject related to a particular investment, and whose education or job experience is verified by the Financial Industry Regulatory Authority or an equivalent self-regulatory organization (as defined in section 3(a)(26) of the Securities Exchange Act of 1934); or”

(b)

Repeal—

(1)

In general— Section 413 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111–203) is hereby repealed.

(2)

Clerical amendment— The table of contents in section 1(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act is amended by striking the items relating to section 413.

Sec. 501 Repeal of the Federal Insurance Office; Creation of the Office of the Independent Insurance Advocate

(a)

changed Establishment— Section 313 of title 31, United States Code, is amended to read as ~~follows:~~follows (and conforming the table of contents for chapter 3 of such title accordingly):

“313. Office of the Independent Insurance Advocate

“(a) Establishment—There is established in the Department of the Treasury a bureau to be known as the Office of the Independent Insurance Advocate (in this section referred to as the “Office”).

“(b) Independent insurance advocate

“(1) Establishment of position—The chief officer of the Office of the Independent Insurance Advocate shall be known as the Independent Insurance Advocate. The Independent Insurance Advocate shall perform the duties of such office under the general direction of the Secretary of the Treasury.

“(2) Appointment—The Independent Insurance Advocate shall be appointed by the President, by and with the advice and consent of the Senate, from among persons having insurance expertise.

“(3) Term

“(A) In general—The Independent Insurance Advocate shall serve a term of 6 years, unless sooner removed by the President upon reasons which shall be communicated to the Senate.

“(B) Service after expiration—If a successor is not nominated and confirmed by the end of the term of service of the Independent Insurance Advocate, the person serving as Independent Insurance Advocate shall continue to serve until such time a successor is appointed and confirmed.

“(C) Vacancy—An Independent Insurance Advocate who is appointed to serve the remainder of a predecessor’s uncompleted term shall be eligible thereafter to be appointed to a full 6 year term.

“(D) Acting official on Financial Stability Oversight Council—In the event of a vacancy in the office of the Independent Insurance Advocate, and pending the appointment and confirmation of a successor, or during the absence or disability of the Independent Insurance Advocate, the Independent Member shall appoint a federal official appointed by the President and confirmed by the Senate from a member agency of the Financial Stability Oversight Council, not otherwise serving on the Council, who shall serve as a member of the Council and act in the place of the Independent Insurance Advocate until such vacancy, absence, or disability concludes.

“(4) Employment—The Independent Insurance Advocate shall be an employee of the Federal Government within the definition of employee under section 2105 of title 5, United States Code.

“(c) Independence; oversight

“(1) Independence—The Secretary of the Treasury may not delay or prevent the issuance of any rule or the promulgation of any regulation by the Independent Insurance Advocate, and may not intervene in any matter or proceeding before the Independent Insurance Advocate, unless otherwise specifically provided by law.

“(2) Oversight by Inspector General—The Office of the Independent Insurance Advocate shall be an office in the establishment of the Department of the Treasury for purposes of the Inspector General Act of 1978 (5 U.S.C. App.).

“(d) Retention of Existing State Regulatory Authority—Nothing in this section or section 314 shall be construed to establish or provide the Office or the Department of the Treasury with general supervisory or regulatory authority over the business of insurance.

“(e) Budget

“(1) Annual transmittal—For each fiscal year, the Independent Insurance Advocate shall transmit a budget estimate and request to the Secretary of the Treasury, which shall specify the aggregate amount of funds requested for such fiscal year for the operations of the Office of the Independent Insurance Advocate.

“(2) Inclusions—In transmitting the proposed budget to the President for approval, the Secretary of the Treasury shall include—

“(A) an aggregate request for the Independent Insurance Advocate; and

“(B) any comments of the Independent Insurance Advocate with respect to the proposal.

“(3) President’s budget—The President shall include in each budget of the United States Government submitted to the Congress—

“(A) a separate statement of the budget estimate prepared in accordance with paragraph (1);

“(B) the amount requested by the President for the Independent Insurance Advocate; and

“(C) any comments of the Independent Insurance Advocate with respect to the proposal if the Independent Insurance Advocate concludes that the budget submitted by the President would substantially inhibit the Independent Insurance Advocate from performing the duties of the office.

“(f) Assistance—The Secretary of the Treasury shall provide the Independent Insurance Advocate such services, funds, facilities and other support services as the Independent Insurance Advocate may request and as the Secretary may approve.

“(g) Personnel

“(1) Employees—The Independent Insurance Advocate may fix the number of, and appoint and direct, the employees of the Office, in accordance with the applicable provisions of title 5, United States Code. The Independent Insurance Advocate is authorized to employ attorneys, analysts, economists, and other employees as may be deemed necessary to assist the Independent Insurance Advocate to carry out the duties and functions of the Office. Unless otherwise provided expressly by law, any individual appointed under this paragraph shall be an employee as defined in section 2105 of title 5, United States Code, and subject to the provisions of such title and other laws generally applicable to the employees of the Executive Branch.

“(2) Compensation—Employees of the Office shall be paid in accordance with the provisions of chapter 51 and subchapter III of chapter 53 of title 5, United States Code, relating to classification and General Schedule pay rates.

“(3) Procurement of temporary and intermittent services—The Independent Insurance Advocate may procure temporary and intermittent services under section 3109(b) of title 5, United States Code, at rates for individuals which do not exceed the daily equivalent of the annual rate of basic pay prescribed for Level V of the Executive Schedule under section 5316 of such title.

“(4) Details—Any employee of the Federal Government may be detailed to the Office with or 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 Office shall report to and be subject to oversight by the Independent Insurance Advocate during the assignment to the office, and may be compensated by the branch, department, or agency from which the employee was detailed.

“(5) Intergovernmental personnel—The Independent Insurance Advocate may enter into agreements under subchapter VI of chapter 33 of title 5, United States Code, with State and local governments, institutions of higher education, Indian tribal governments, and other eligible organizations for the assignment of intermittent, part-time, and full-time personnel, on a reimbursable or non-reimbursable basis.

“(h) Ethics

“(1) Designated ethics official—The Legal Counsel of the Financial Stability Oversight Council, or in the absence of a Legal Counsel of the Council, the designated ethics official of any Council member agency, as chosen by the Independent Insurance Advocate, shall be the ethics official for the Independent Insurance Advocate.

“(2) Restriction on representation—In addition to any restriction under section 205(c) of title18, United States Code, except as provided in subsections (d) through (i) of section 205 of such title, the Independent Insurance Advocate (except in the proper discharge of official duties) shall not, with or without compensation, represent anyone to or before any officer or employee of—

“(A) the Financial Stability Oversight Council on any matter; or

“(B) the Department of Justice with respect to litigation involving a matter described in subparagraph (A).

“(3) Compensation for services provided by another—For purposes of section 203 of title 18, United States Code, and if a special government employee—

“(A) the Independent Insurance Advocate shall not be subject to the restrictions of subsection (a)(1) of section 203,of title 18, United States Code, for sharing in compensation earned by another for representations on matters covered by such section; and

“(B) a person shall not be subject to the restrictions of subsection (a)(2) of such section for sharing such compensation with the Independent Insurance Advocate.

“(i) Advisory, technical, and professional committees—The Independent Insurance Advocate may appoint such special advisory, technical, or professional committees as may be useful in carrying out the functions of the Office and the members of such committees may be staff of the Office, or other persons, or both.

“(j) Mission and functions

“(1) Mission—In carrying out the functions under this subsection, the mission of the Office shall be to act as an independent advocate on behalf of the interests of United States policyholders on prudential aspects of insurance matters of importance, and to provide perspective on protecting their interests, separate and apart from any other Federal agency or State insurance regulator.

“(2) Office—The Office shall have the authority—

“(A) to coordinate Federal efforts on prudential aspects of international insurance matters, including representing the United States, as appropriate, in the International Association of Insurance Supervisors (or a successor entity) and assisting the Secretary in negotiating covered agreements (as such term is defined in subsection (q)) in coordination with States (including State insurance commissioners) and the United States Trade Representative;

“(B) to consult with the States (including State insurance regulators) regarding insurance matters of national importance and prudential insurance matters of international importance;

“(C) to assist the Secretary in administering the Terrorism Insurance Program established in the Department of the Treasury under the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note);

“(D) to observe all aspects of the insurance industry, including identifying issues or gaps in the regulation of insurers that could contribute to a systemic crisis in the insurance industry or the United States financial system; and

“(E) to make determinations and exercise the authority under subsection (m) with respect to covered agreements and State insurance measures.

“(3) Membership on Financial Stability Oversight Council

“(A) In general—The Independent Insurance Advocate shall serve, pursuant to section 111(b)(1)(J) of the Financial Stability Act of 2010 (12 U.S.C. 5321(b)(1)(J)), as a member on the Financial Stability Oversight Council.

“(B) Authority—To assist the Financial Stability Oversight Council with its responsibilities to monitor international insurance developments, advise the Congress, and make recommendations, the Independent Insurance Advocate shall have the authority—

“(i) to regularly consult with international insurance supervisors and international financial stability counterparts;

“(ii) to consult with the Board of Governors of the Federal Reserve System and the States with respect to representing the United States, as appropriate, in the International Association of Insurance Supervisors (including to become a non-voting member thereof), particularly on matters of systemic risk;

“(iii) to participate at the Financial Stability Board of The Group of Twenty and to join with other members from the United States including on matters related to insurance; and

“(iv) to participate with the United States delegation to the Organization for Economic Cooperation and Development and observe and participate at the Insurance and Private Pensions Committee.

“(4) Limitations on participation in supervisory colleges—The Office may not engage in any activities that it is not specifically authorized to engage in under this section or any other provision of law, including participation in any supervisory college or other meetings or fora for cooperation and communication between the involved insurance supervisors established for the fundamental purpose of facilitating the effectiveness of supervision of entities which belong to an insurance group.

“(k) Scope—The authority of the Office as specified and limited in this section shall extend to all lines of insurance except—

“(1) health insurance, as determined by the Secretary in coordination with the Secretary of Health and Human Services based on section 2791 of the Public Health Service Act (42 U.S.C. 300gg-91);

“(2) long-term care insurance, except long-term care insurance that is included with life or annuity insurance components, as determined by the Secretary in coordination with the Secretary of Health and Human Services, and in the case of long-term care insurance that is included with such components, the Secretary shall coordinate with the Secretary of Health and Human Services in performing the functions of the Office; and

“(3) crop insurance, as established by the Federal Crop Insurance Act (7 U.S.C. 1501 et seq.).

“(l) Access to information—In carrying out the functions required under subsection (j), the Office may coordinate with any relevant Federal agency and any State insurance regulator (or other relevant Federal or State regulatory agency, if any, in the case of an affiliate of an insurer) and any publicly available sources for the provision to the Office of publicly available information. Notwithstanding any other provision of law, each such relevant Federal agency and State insurance regulator or other Federal or State regulatory agency is authorized to provide to the Office such data or information.

“(m) Preemption pursuant to covered agreements

“(1) Standards—A State insurance measure shall be preempted pursuant to this section or section 314 if, and only to the extent that the Independent Insurance Advocate determines, in accordance with this subsection, that the measure—

“(A) results in less favorable treatment of a non-United States insurer domiciled in a foreign jurisdiction that is subject to a covered agreement than a United States insurer domiciled, licensed, or otherwise admitted in that State; and

“(B) is inconsistent with a covered agreement.

“(2) Determination

“(A) Notice of potential inconsistency—Before making any determination under paragraph (1), the Independent Insurance Advocate shall—

“(i) notify and consult with the appropriate State regarding any potential inconsistency or preemption;

“(ii) notify and consult with the United States Trade Representative regarding any potential inconsistency or preemption;

“(iii) cause to be published in the Federal Register notice of the issue regarding the potential inconsistency or preemption, including a description of each State insurance measure at issue and any applicable covered agreement;

“(iv) provide interested parties a reasonable opportunity to submit written comments to the Office; and

“(v) consider any comments received.

“(B) Scope of review—For purposes of this subsection, any determination of the Independent Insurance Advocate regarding State insurance measures, and any preemption under paragraph (1) as a result of such determination, shall be limited to the subject matter contained within the covered agreement involved and shall achieve a level of protection for insurance or reinsurance consumers that is substantially equivalent to the level of protection achieved under State insurance or reinsurance regulation.

“(C) Notice of determination of inconsistency—Upon making any determination under paragraph (1), the Director shall—

“(i) notify the appropriate State of the determination and the extent of the inconsistency;

“(ii) establish a reasonable period of time, which shall not be less than 30 days, before the determination shall become effective; and

“(iii) notify the Committees on Financial Services and Ways and Means of the House of Representatives and the Committees on Banking, Housing, and Urban Affairs and Finance of the Senate.

“(3) Notice of effectiveness—Upon the conclusion of the period referred to in paragraph (2)(C)(ii), if the basis for such determination still exists, the determination shall become effective and the Independent Insurance Advocate shall—

“(A) cause to be published a notice in the Federal Register that the preemption has become effective, as well as the effective date; and

“(B) notify the appropriate State.

“(4) Limitation—No State may enforce a State insurance measure to the extent that such measure has been preempted under this subsection.

“(5) Applicability of Administrative Procedures Act—Determinations of inconsistency made pursuant to paragraph (2) shall be subject to the applicable provisions of subchapter II of chapter 5 of title 5, United States Code (relating to administrative procedure), and chapter 7 of such title (relating to judicial review), except that in any action for judicial review of a determination of inconsistency, the court shall determine the matter de novo.

“(n) Consultation—The Independent Insurance Advocate shall consult with State insurance regulators, individually or collectively, to the extent the Independent Insurance Advocate determines appropriate, in carrying out the functions of the Office.

“(o) Notices and requests for comment—In addition to the other functions and duties specified in this section, the Independent Insurance Advocate may prescribe such notices and requests for comment in the Federal Register as are deemed necessary related to and governing the manner in which the duties and authorities of the Independent Insurance Advocate are carried out;

“(p) Savings Provisions—Nothing in this section shall—

“(1) preempt—

“(A) any State insurance measure that governs any insurer's rates, premiums, underwriting, or sales practices;

“(B) any State coverage requirements for insurance;

“(C) the application of the antitrust laws of any State to the business of insurance; or

“(D) any State insurance measure governing the capital or solvency of an insurer, except to the extent that such State insurance measure results in less favorable treatment of a non-United State insurer than a United States insurer; or

“(2) affect the preemption of any State insurance measure otherwise inconsistent with and preempted by Federal law.

“(q) Retention of Authority of Federal Financial Regulatory Agencies—Nothing in this section or section 314 shall be construed to limit the authority of any Federal financial regulatory agency, including the authority to develop and coordinate policy, negotiate, and enter into agreements with foreign governments, authorities, regulators, and multinational regulatory committees and to preempt State measures to affect uniformity with international regulatory agreements.

“(r) Retention of Authority of United States Trade Representative—Nothing in this section or section 314 shall be construed to affect the authority of the Office of the United States Trade Representative pursuant to section 141 of the Trade Act of 1974 (19 U.S.C. 2171) or any other provision of law, including authority over the development and coordination of United States international trade policy and the administration of the United States trade agreements program.

“(s) Congressional testimony—The Independent Insurance Advocate shall appear before the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs at semi-annual hearings and shall provide testimony, which shall include submitting written testimony in advance of such appearances to such committees and to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate, on the following matters:

“(1) Office activities—The efforts, activities, objectives, and plans of the Office.

“(2) Section 313(l) actions—Any actions taken by the Office pursuant to subsection (l) (regarding preemption pursuant to covered agreements).

“(3) Insurance industry—The state of, and developments in, the insurance industry.

“(4) U.S. and global insurance and reinsurance markets—The breadth and scope of the global insurance and reinsurance markets and the critical role such markets plays in supporting insurance in the United States and the ongoing impacts of part II of the Nonadmitted and Reinsurance Reform Act of 2010 on the ability of State regulators to access reinsurance information for regulated companies in their jurisdictions.

“(5) Other—Any other matters as deemed relevant by the Independent Insurance Advocate or requested by such Committees.

“(t) Report upon end of term of office—Not later than two months prior to the expiration of the term of office, or discontinuation of service, of each individual serving as the Independent Insurance Advocate, the Independent Insurance Advocate shall submit a report to the Committees on Financial Services and Ways and Means of the House of Representatives and the Committees on Banking, Housing, and Urban Affairs and Finance of the Senate setting forth recommendations regarding the Financial Stability Oversight Council and the role, duties, and functions of the Independent Insurance Advocate.

“(u) Definitions—In this section and section 314, the following definitions shall apply:

“(1) Affiliate—The term “affiliate” means, with respect to an insurer, any person who controls, is controlled by, or is under common control with the insurer.

“(2) Covered agreement—The term “covered agreement” means a written bilateral or multilateral agreement regarding prudential measures with respect to the business of insurance or reinsurance that—

“(A) is entered into between the United States and one or more foreign governments, authorities, or regulatory entities; and

“(B) relates to the recognition of prudential measures with respect to the business of insurance or reinsurance that achieves a level of protection for insurance or reinsurance consumers that is substantially equivalent to the level of protection achieved under State insurance or reinsurance regulation.

“(3) Insurer—The term “insurer” means any person engaged in the business of insurance, including reinsurance.

“(4) Federal financial regulatory agency—The term “Federal financial regulatory agency” means the Department of the Treasury, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, or the National Credit Union Administration.

“(5) Financial Stability Oversight Council—The term “Financial Stability Oversight Council ” means the Financial Stability Oversight Council established under section 111(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5321(a)).

“(6) Member agency—The term “member agency” has the meaning given such term in section 111(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5321(a)).

“(7) Non-United States insurer—The term “non-United States insurer” means an insurer that is organized under the laws of a jurisdiction other than a State, but does not include any United States branch of such an insurer.

“(8) Office—The term “Office” means the Office of the Independent Insurance Advocate established by this section.

“(9) State insurance measure—The term “State insurance measure” means any State law, regulation, administrative ruling, bulletin, guideline, or practice relating to or affecting prudential measures applicable to insurance or reinsurance.

“(10) State insurance regulator—The term “State insurance regulator” means any State regulatory authority responsible for the supervision of insurers.

“(11) Substantially equivalent to the level of protection achieved—The term “substantially equivalent to the level of protection achieved” means the prudential measures of a foreign government, authority, or regulatory entity achieve a similar outcome in consumer protection as the outcome achieved under State insurance or reinsurance regulation.

“(12) United States insurer—The term “United States insurer” means—

“(A) an insurer that is organized under the laws of a State; or

“(B) a United States branch of a non-United States insurer.”

(b)

Pay at Level III of Executive Schedule— Section 5314 of title 5, United States Code, is amended by adding at the end the following new item:

“Independent Insurance Advocate, Department of the Treasury.”

(c)

Voting member of FSOC— Paragraph (1) of section 111(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5321(b)(1)) is amended by striking subparagraph (J) and inserting the following new subparagraph:

“(J) the Independent Insurance Advocate appointed pursuant to section 313 of title 31, United States Code.”

(d)

Independence— Section 111 of Public Law 93–495 (12 U.S.C. 250) is amended—

(1)

by inserting “the Independent Insurance Advocate of the Department of the Treasury,” after “Federal Housing Finance Agency,”; and

(2)

by inserting “or official” before “submitting them”.

(e)

Transfer of employees— All employees of the Department of Treasury who are performing staff functions for the independent member of the Financial Stability Oversight Council under section 111(b)(2)(J) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5321(b)(2)(J)) on a full-time equivalent basis as of the date of enactment of this Act shall be eligible for transfer to the Office of the Independent Insurance Advocate established pursuant to the amendment made by subsection (a) of this section for appointment as an employee and shall be transferred at the joint discretion of the Independent Insurance Advocate and the eligible employee. Any employee eligible for transfer that is not appointed within 360 days from the date of enactment of this Act shall be eligible for detail under section 313(f)(4) of title 31, United States Code.

(f)

Temporary service; transition— Notwithstanding the amendment made by subsection (a) of this section, during the period beginning on the date of the enactment of this Act and ending on the date on which the Independent Insurance Advocate is appointed and confirmed pursuant to section 313(b)(2) of title 31, United States Code, as amended by such amendment, the person serving, on such date of enactment, as the independent member of the Financial Stability Oversight Council pursuant to section 111(b)(1)(J) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5321(b)(1)(J)) shall act for all purposes as, and with the full powers of, the Independent Insurance Advocate.

(g)

Comparability in compensation schedules— Subsection (a) of section 1206 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833b(a)) is amended by inserting “and the Office of the Independent Insurance Advocate of the Department of the Treasury,” after “Farm Credit Administration,”.

(h)

Senior executives— Subparagraph (D) of section 3132(a)(1) of title 5, United States Code, is amended by inserting “the Office of the Independent Insurance Advocate of the Department of the Treasury,” after “Finance Agency,”.

Sec. 611 Definitions

As used in this subtitle—

(1)

the term agency means the Board of Governors of the Federal Reserve System, the Consumer Financial Opportunity Commission, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Office of the Comptroller of the Currency, the National Credit Union Administration, and the Securities and Exchange Commission;

(2)

the term chief economist means—

(A)

with respect to the Board of Governors of the Federal Reserve System, the Director of the Division of Research and Statistics, or an employee of the agency with comparable authority;

(B)

with respect to the Consumer Financial Opportunity Commission, the Head of the Office of Economic Analysis, or an employee of the agency with comparable authority;

(C)

with respect to the Commodity Futures Trading Commission, the Chief Economist, or an employee of the agency with comparable authority;

(D)

with respect to the Federal Deposit Insurance Corporation, the Director of the Division of Insurance and Research, or an employee of the agency with comparable authority;

(E)

with respect to the Federal Housing Finance Agency, the Chief Economist, or an employee of the agency with comparable authority;

(F)

with respect to the Office of the Comptroller of the Currency, the Director for Policy Analysis, or an employee of the agency with comparable authority;

(G)

with respect to the National Credit Union Administration, the Chief Economist, or an employee of the agency with comparable authority; and

(H)

with respect to the Securities and Exchange Commission, the Director of the Division of Economic and Risk Analysis, or an employee of the agency with comparable authority;

(3)

the term Council means the Chief Economists Council established under section 618; and

(4)

the term regulation—

(A)

means an agency statement of general applicability and future effect that is designed to implement, interpret, or prescribe law or policy or to describe the procedure or practice requirements of an agency, including rules, orders of general applicability, interpretive releases, and other statements of general applicability that the agency intends to have the force and effect of law; and

(B)

does not include—

(i)

a regulation issued in accordance with the formal rulemaking provisions of section 556 or 557 of title 5, United States Code;

(ii)

a regulation that is limited to agency organization, management, or personnel matters;

(iii)

a regulation promulgated pursuant to statutory authority that expressly prohibits compliance with this provision;

(iv)

a regulation that is certified by the agency to be an emergency action, if such certification is published in the Federal Register;

(v)

a regulation that is promulgated by the Board of Governors of the Federal Reserve System or the Federal Open Market Committee under section 10A, 10B, 13, 13A, or 19 of the Federal Reserve Act, or any of subsections (a) through (f) of section 14 of that Act; or

(vi)

a regulation filed with the Commission by a self-regulatory organization—

(I)

changed that ~~meet~~ meets the criteria for immediate effectiveness under section 240.19b-4(f) of title 17, Code of Federal Regulations; ~~and~~or

(II)

for which the self-regulatory organization has itself conducted the cost-benefit analysis and otherwise complied with the requirements of section 612.

Sec. 1076 Crowdfunding vehicles

(a)

Amendments to the Securities Act of 1933— The Securities Act of 1933 (15 U.S.C. 77a et seq.) is amended—

(1)

in section 4A(f)(3), by inserting “by any of paragraphs (1) through (14) of” before “section 3(c)”; and

(2)

in section 4(a)(6)(B), by inserting after “any investor” the following: “, other than a crowdfunding vehicle (as defined in section 2(a) of the Investment Company Act of 1940),”.

(b)

changed Amendments to the Investment Company Act of 1940— The Investment Company Act of 1940 (15 U.S.C. ~~80a-1~~ 80a–1 et seq.) is amended—

(1)

in section 2(a), by adding at the end the following:

“(55) The term “crowdfunding vehicle” means a company—

“(A) whose purpose (as set forth in its organizational documents) is limited to acquiring, holding, and disposing securities issued by a single company in one or more transactions and made pursuant to section 4(a)(6) of the Securities Act of 1933;

“(B) which issues only one class of securities;

“(C) which receives no compensation in connection with such acquisition, holding, or disposition of securities;

changed “(D) no associated person of which receives any compensation in connection with such acquisition, holding or disposition of securities unless such person is acting as or on behalf of an investment adviser registered under the Investment Advisers Act of ~~1940;~~1940 or registered as an investment adviser in the State in which the investment adviser maintains its principal office and place of business;

“(E) the securities of which have been issued in a transaction made pursuant to section 4(a)(6) of the Securities Act of 1933, where both the crowdfunding vehicle and the company whose securities it holds are co-issuers;

“(F) which is current in its ongoing disclosure obligations under Rule 202 of Regulation Crowdfunding (17 C.F.R. 227.202);

“(G) the company whose securities it holds is current in its ongoing disclosure obligations under Rule 202 of Regulation Crowdfunding (17 C.F.R. 227.202); and

changed “(H) is advised by an investment adviser registered under the Investment Advisers Act of ~~1940.”~~1940 or registered as an investment adviser in the State in which the investment adviser maintains its principal office and place of business.”

(2)

in section 3(c), by adding at the end the following:

“(15) Any crowdfunding vehicle.”

Sec. 1077 Crowdfunding exemption from registration

changed Section 12(g)(6) of the Securities Exchange Act of 1934 (15 U.S.C. ~~78l(g)(6)~~ 78l(g)(6)) is amended—

(1)

by striking “The Commission” and inserting the following:

“(A) In general—The Commission”

(2)

by striking “section 4(6)” and inserting “section 4(a)(6)”; and

(3)

by adding at the end the following:

“(B) Treatment of securities issued by certain issuers—An exemption under subparagraph (A) shall be unconditional for securities offered by an issuer that had a public float of less than $75,000,000 as of the last business day of the issuer’s most recently completed semiannual period, computed by multiplying the aggregate worldwide number of shares of the issuer’s common equity securities held by non-affiliates by the price at which such securities were last sold (or the average bid and asked prices of such securities) in the principal market for such securities or, in the event the result of such public float calculation is zero, had annual revenues of less than $50,000,000 as of the issuer’s most recently completed fiscal year.”

Sec. 1081 Definitions

(a)

Securities Exchange Act of 1934— Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended by adding at the end the following new paragraphs:

changed ~~“(81)~~ “(83) Proxy advisory firm—The term proxy advisory firm means any person who is primarily engaged in the business of providing proxy voting research, analysis, or recommendations to clients, which conduct constitutes a solicitation within the meaning of section 14 and the Commission’s rules and regulations thereunder, except to the extent that the person is exempted by such rules and regulations from requirements otherwise applicable to persons engaged in a solicitation.

changed ~~“(82)~~ “(84) Person associated with a proxy advisory firm—The term person associated with a proxy advisory firm means any partner, officer, or director of a proxy advisory firm (or any person occupying a similar status or performing similar functions), any person directly or indirectly controlling, controlled by, or under common control with a proxy advisory firm, or any employee of a proxy advisory firm, except that persons associated with a proxy advisory firm whose functions are clerical or ministerial shall not be included in the meaning of such term. The Commission may by rules and regulations classify, for purposes or any portion or portions of this Act, persons, including employees controlled by a proxy advisory firm.”

(b)

Applicable definitions— As used in this subtitle—

(1)

the term Commission means the Securities and Exchange Commission; and

(2)

changed the term proxy advisory firm has the same meaning as in section ~~3(a)(81)~~ 3(a)(83) of the Securities Exchange Act of 1934, as added by this subtitle.

Sec. 1082 Registration of proxy advisory firms

(a)

Amendment— The Securities Exchange Act of 1934 is amended by inserting after section 15G the following new section:

“15H. Registration of proxy advisory firms

“(a) Conduct prohibited—It shall be unlawful for a proxy advisory firm to make use of the mails or any means or instrumentality of interstate commerce to provide proxy voting research, analysis, or recommendations to any client, unless such proxy advisory firm is registered under this section.

“(b) Registration procedures

“(1) Application for registration

“(A) In general—A proxy advisory firm must file with the Commission an application for registration, in such form as the Commission shall require, by rule or regulation, and containing the information described in subparagraph (B).

“(B) Required information—An application for registration under this section shall contain information regarding—

“(i) a certification that the applicant has adequate financial and managerial resources to consistently provide proxy advice based on accurate information;

“(ii) the procedures and methodologies that the applicant uses in developing proxy voting recommendations, including whether and how the applicant considers the size of a company when making proxy voting recommendations;

“(iii) the organizational structure of the applicant;

“(iv) whether or not the applicant has in effect a code of ethics, and if not, the reasons therefor;

“(v) any potential or actual conflict of interest relating to the ownership structure of the applicant or the provision of proxy advisory services by the applicant, including whether the proxy advisory firm engages in services ancillary to the provision of proxy advisory services such as consulting services for corporate issuers, and if so the revenues derived therefrom;

“(vi) the policies and procedures in place to manage conflicts of interest under subsection (f); and

“(vii) any other information and documents concerning the applicant and any person associated with such applicant as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors.

“(2) Review of application

“(A) Initial determination—Not later than 90 days after the date on which the application for registration is filed with the Commission under paragraph (1) (or within such longer period as to which the applicant consents) the Commission shall—

“(i) by order, grant registration; or

“(ii) institute proceedings to determine whether registration should be denied.

“(B) Conduct of proceedings

“(i) Content—Proceedings referred to in subparagraph (A)(ii) shall—

“(I) include notice of the grounds for denial under consideration and an opportunity for hearing; and

“(II) be concluded not later than 120 days after the date on which the application for registration is filed with the Commission under paragraph (1).

“(ii) Determination—At the conclusion of such proceedings, the Commission, by order, shall grant or deny such application for registration.

“(iii) Extension authorized—The Commission may extend the time for conclusion of such proceedings for not longer than 90 days, if it finds good cause for such extension and publishes its reasons for so finding, or for such longer period as to which the applicant consents.

“(C) Grounds for decision—The Commission shall grant registration under this subsection—

“(i) if the Commission finds that the requirements of this section are satisfied; and

“(ii) unless the Commission finds (in which case the Commission shall deny such registration) that—

“(I) the applicant has failed to certify to the Commission’s satisfaction that it has adequate financial and managerial resources to consistently provide proxy advice based on accurate information and to materially comply with the procedures and methodologies disclosed under paragraph (1)(B) and with subsections (f) and (g); or

“(II) if the applicant were so registered, its registration would be subject to suspension or revocation under subsection (e).

“(3) Public availability of information—Subject to section 24, the Commission shall make the information and documents submitted to the Commission by a proxy advisory firm in its completed application for registration, or in any amendment submitted under paragraph (1) or (2) of subsection (c), publicly available on the Commission’s website, or through another comparable, readily accessible means.

“(c) Update of registration

“(1) Update—Each registered proxy advisory firm shall promptly amend and update its application for registration under this section if any information or document provided therein becomes materially inaccurate, except that a registered proxy advisory firm is not required to amend the information required to be filed under subsection (b)(1)(B)(i) by filing information under this paragraph, but shall amend such information in the annual submission of the organization under paragraph (2) of this subsection.

“(2) Certification—Not later than 90 calendar days after the end of each calendar year, each registered proxy advisory firm shall file with the Commission an amendment to its registration, in such form as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors—

“(A) certifying that the information and documents in the application for registration of such registered proxy advisory firm continue to be accurate in all material respects; and

“(B) listing any material change that occurred to such information or documents during the previous calendar year.

“(d) Censure, denial, or suspension of registration; notice and hearing—The Commission, by order, shall censure, place limitations on the activities, functions, or operations of, suspend for a period not exceeding 12 months, or revoke the registration of any registered proxy advisory firm if the Commission finds, on the record after notice and opportunity for hearing, that such censure, placing of limitations, suspension, or revocation is necessary for the protection of investors and in the public interest and that such registered proxy advisory firm, or any person associated with such an organization, whether prior to or subsequent to becoming so associated—

“(1) has committed or omitted any act, or is subject to an order or finding, enumerated in subparagraph (A), (D), (E), (H), or (G) of section 15(b)(4), has been convicted of any offense specified in section 15(b)(4)(B), or is enjoined from any action, conduct, or practice specified in subparagraph (C) of section 15(b)(4), during the 10-year period preceding the date of commencement of the proceedings under this subsection, or at any time thereafter;

“(2) has been convicted during the 10-year period preceding the date on which an application for registration is filed with the Commission under this section, or at any time thereafter, of—

“(A) any crime that is punishable by imprisonment for one or more years, and that is not described in section 15(b)(4)(B); or

“(B) a substantially equivalent crime by a foreign court of competent jurisdiction;

“(3) is subject to any order of the Commission barring or suspending the right of the person to be associated with a registered proxy advisory firm;

“(4) fails to furnish the certifications required under subsections (b)(2)(C)(ii)(I) and (c)(2);

“(5) has engaged in one or more prohibited acts enumerated in paragraph (1); or

“(6) fails to maintain adequate financial and managerial resources to consistently offer advisory services with integrity, including by failing to comply with subsections (f) or (g).

“(e) Termination of registration

changed “(1) Voluntary withdrawal—A registered proxy advisory firm may, upon such terms and conditions as the Commission may establish as necessary in the public interest or for the protection of investors, which terms and conditions shall include at a minimum that the registered proxy advisory firm will no longer conduct such activities as to bring it within the definition of proxy advisory firm in section ~~3(a)(81)~~ 3(a)(83) of the Securities Exchange Act of 1934, withdraw from registration by filing a written notice of withdrawal to the Commission.

“(2) Commission authority—In addition to any other authority of the Commission under this title, if the Commission finds that a registered proxy advisory firm is no longer in existence or has ceased to do business as a proxy advisory firm, the Commission, by order, shall cancel the registration under this section of such registered proxy advisory firm.

“(f) Management of conflicts of interest

“(1) Organization policies and procedures—Each registered proxy advisory firm shall establish, maintain, and enforce written policies and procedures reasonably designed, taking into consideration the nature of the business of such registered proxy advisory firm and associated persons, to address and manage any conflicts of interest that can arise from such business.

“(2) Commission authority—The Commission shall issue final rules to prohibit, or require the management and disclosure of, any conflicts of interest relating to the offering of proxy advisory services by a registered proxy advisory firm, including, without limitation, conflicts of interest relating to—

“(A) the manner in which a registered proxy advisory firm is compensated by the client, or any affiliate of the client, for providing proxy advisory services;

“(B) the provision of consulting, advisory, or other services by a registered proxy advisory firm, or any person associated with such registered proxy advisory firm, to the client;

“(C) business relationships, ownership interests, or any other financial or personal interests between a registered proxy advisory firm, or any person associated with such registered proxy advisory firm, and any client, or any affiliate of such client;

“(D) transparency around the formulation of proxy voting policies;

“(E) the execution of proxy votes if such votes are based upon recommendations made by the proxy advisory firm in which someone other than the issuer is a proponent;

“(F) issuing recommendations where proxy advisory firms provide advisory services to a company; and

“(G) any other potential conflict of interest, as the Commission deems necessary or appropriate in the public interest or for the protection of investors.

“(g) Reliability of proxy advisory firm services

“(1) In general—Each registered proxy advisory firm shall have staff sufficient to produce proxy voting recommendations that are based on accurate and current information. Each registered proxy advisory firm shall detail procedures sufficient to permit companies receiving proxy advisory firm recommendations access in a reasonable time to the draft recommendations, with an opportunity to provide meaningful comment thereon, including the opportunity to present details to the person responsible for developing the recommendation in person or telephonically. Each registered proxy advisory firm shall employ an ombudsman to receive complaints about the accuracy of voting information used in making recommendations from the subjects of the proxy advisory firm’s voting recommendations, and shall resolve those complaints in a timely fashion and in any event prior to voting on the matter to which the recommendation relates.

“(2) Draft recommendations defined—For purposes of this subsection, the term “draft recommendations”—

“(A) means the overall conclusions of proxy voting recommendations prepared for the clients of a proxy advisory firm, including any public data cited therein, any company information or substantive analysis impacting the recommendation, and the specific voting recommendations on individual proxy ballot issues; and

“(B) does not include the entirety of the proxy advisory firm’s final report to its clients.

“(h) Designation of compliance officer—Each registered proxy advisory firm shall designate an individual responsible for administering the policies and procedures that are required to be established pursuant to subsections (f) and (g), and for ensuring compliance with the securities laws and the rules and regulations thereunder, including those promulgated by the Commission pursuant to this section.

“(i) Prohibited conduct

“(1) Prohibited acts and practices—The Commission shall issue final rules to prohibit any act or practice relating to the offering of proxy advisory services by a registered proxy advisory firm that the Commission determines to be unfair or coercive, including any act or practice relating to—

“(A) conditioning a voting recommendation or other proxy advisory firm recommendation on the purchase by an issuer or an affiliate thereof of other services or products, of the registered proxy advisory firm or any person associated with such registered proxy advisory firm; and

“(B) modifying a voting recommendation or otherwise departing from its adopted systematic procedures and methodologies in the provision of proxy advisory services, based on whether an issuer, or affiliate thereof, subscribes or will subscribe to other services or product of the registered proxy advisory firm or any person associated with such organization.

“(2) Rule of construction—Nothing in paragraph (1), or in any rules or regulations adopted thereunder, may be construed to modify, impair, or supersede the operation of any of the antitrust laws (as defined in the first section of the Clayton Act, except that such term includes section 5 of the Federal Trade Commission Act, to the extent that such section 5 applies to unfair methods of competition).

“(j) Statements of financial condition—Each registered proxy advisory firm shall, on a confidential basis, file with the Commission, at intervals determined by the Commission, such financial statements, certified (if required by the rules or regulations of the Commission) by an independent public auditor, and information concerning its financial condition, as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors.

“(k) Annual report—Each registered proxy advisory firm shall, at the beginning of each fiscal year of such firm, report to the Commission on the number of shareholder proposals its staff reviewed in the prior fiscal year, the number of recommendations made in the prior fiscal year, the number of staff who reviewed and made recommendations on such proposals in the prior fiscal year, and the number of recommendations made in the prior fiscal year where the proponent of such recommendation was a client of or received services from the proxy advisory firm.

“(l) Transparent policies—Each registered proxy advisory firm shall file with the Commission and make publicly available its methodology for the formulation of proxy voting policies and voting recommendations.

“(m) Rules of construction

“(1) No waiver of rights, privileges, or defenses—Registration under and compliance with this section does not constitute a waiver of, or otherwise diminish, any right, privilege, or defense that a registered proxy advisory firm may otherwise have under any provision of State or Federal law, including any rule, regulation, or order thereunder.

“(2) No private right of action—Nothing in this section may be construed as creating any private right of action, and no report filed by a registered proxy advisory firm in accordance with this section or section 17 shall create a private right of action under section 18 or any other provision of law.

“(n) Regulations

“(1) New provisions—Such rules and regulations as are required by this section or are otherwise necessary to carry out this section, including the application form required under subsection (a)—

“(A) shall be issued by the Commission, not later than 180 days after the date of enactment of this section; and

“(B) shall become effective not later than 1 year after the date of enactment of this section.

“(2) Review of existing regulations—Not later than 270 days after the date of enactment of this section, the Commission shall—

“(A) review its existing rules and regulations which affect the operations of proxy advisory firms;

“(B) amend or revise such rules and regulations in accordance with the purposes of this section, and issue such guidance, as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors; and

“(C) direct Commission staff to withdraw the Egan Jones Proxy Services (May 27, 2004) and Institutional Shareholder Services, Inc. (September 15, 2004) no-action letters.

“(o) Applicability—This section, other than subsection (n), which shall apply on the date of enactment of this section, shall apply on the earlier of—

“(1) the date on which regulations are issued in final form under subsection (n)(1); or

“(2) 270 days after the date of enactment of this section.”

(b)

Conforming amendment— Section 17(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78q(a)(1)) is amended by inserting “proxy advisory firm,” after “nationally recognized statistical rating organization,”.

Sec. 1096 Application of exemption

changed Section 18(b)(1) of the Securities Act of 1933 (15 U.S.C. ~~77r(b)(1))~~ 77r(b)(1)), as amended by section 1056(b) of this Act, is further amended—

(1)

by striking subparagraph (A);

(2)

in subparagraph (B), by striking “that the Commission determines by rule (on its own initiative or on the basis of a petition) are substantially similar to the listing standards applicable to securities described in subparagraph (A)” and inserting “that have been approved by the Commission”;

(3)

in subparagraph (C), by striking “or (B)”; and

(4)

changed by redesignating subparagraphs ~~(B)~~ (B), (C), and ~~(C)~~ (D) as subparagraphs ~~(A) and~~ (A), (B), and (C), respectively.

Sec. 1106 Definition of points and fees

(a)

Amendment to section 103 of TILA— Paragraph (4) of section 103(aa) of the Truth in Lending Act, as redesignated by section 1102, is amended—

(1)

by striking “paragraph (1)(B)” and inserting “paragraph (1)(A) and section 129C”;

(2)

in subparagraph (C)—

(A)

by inserting “and insurance” after “taxes”;

(B)

in clause (ii), by inserting “, except as retained by a creditor or its affiliate as a result of their participation in an affiliated business arrangement (as defined in section 3(7) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602(7))” after “compensation”; and

(C)

by striking clause (iii) and inserting the following:

“(iii) the charge is—

“(I) a bona fide third-party charge not retained by the mortgage originator, creditor, or an affiliate of the creditor or mortgage originator; or

“(II) a charge set forth in section 106(e)(1);”

(3)

in subparagraph (D)—

(A)

by striking “accident,”; and

(B)

by striking “or any payments” and inserting “and any payments”.

(b)

Amendment to section 129C of TILA— Section 129C of the Truth in Lending Act (15 U.S.C. 1639c) is amended—

(1)

changed in subsection (a)(5)(C), by striking “103” and all that follows through “or mortgage originator” and ~~inserting“103(aa)(4)”;~~ inserting “103(aa)(4)”; and

(2)

changed in subsection (b)(2)(C)(i), by striking “103” and all that follows through “or mortgage originator)” and ~~inserting“103(aa)(4)”.~~inserting “103(aa)(4)”.

Sec. 1112 Amendments to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989

Section 951 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833a) is amended—

(1)

in subsection (c)(2), by striking “affecting a federally insured financial institution” and inserting “against a federally insured financial institution or by a federally insured financial institution against an unaffiliated third person”; and

(2)

in subsection (g)—

(A)

changed in the ~~header,~~ heading, by striking “subpoenas” and inserting “investigations”; and

(B)

by amending paragraph (1)(C) to read as follows:

“(C) summon witnesses and require the production of any books, papers, correspondence, memoranda, or other records which the Attorney General deems relevant or material to the inquiry, if the Attorney General—

“(i) requests a court order from a court of competent jurisdiction for such actions and offers specific and articulable facts showing that there are reasonable grounds to believe that the information or testimony sought is relevant and material for conducting an investigation under this section; or

“(ii) either personally or through delegation no lower than the Deputy Attorney General, issues and signs a subpoena for such actions and such subpoena is supported by specific and articulable facts showing that there are reasonable grounds to believe that the information or testimony sought is relevant for conducting an investigation under this section.”

H.R. 5983 — what changed

Sec. 105 Definitions

Sec. 211 Repeal and modification of provisions of the Financial Stability Act of 2010

Sec. 232 Liquidation, reorganization, or recapitalization of a covered financial corporation

Sec. 311 Consumer Financial Opportunity Commission

Sec. 313 Consumer Financial Opportunity Commission Inspector General Reform

Sec. 316 Commission dual mandate and economic analysis

Sec. 323 Reform of Consumer Financial Civil Penalty Fund

Sec. 324 Commission research paper transparency

Sec. 332 Repeal of Council authority to set aside Bureau rules and requirement of safety and soundness considerations when issuing rules

Sec. 404 Fees to offset appropriations

Sec. 411 Internal risk controls

Sec. 421 Subpoena duration and renewal

Sec. 442 Exemption from risk retention requirements for nonresidential mortgage

Sec. 452 Definition of accredited investor

Sec. 501 Repeal of the Federal Insurance Office; Creation of the Office of the Independent Insurance Advocate

Sec. 611 Definitions

Sec. 1076 Crowdfunding vehicles

Sec. 1077 Crowdfunding exemption from registration

Sec. 1081 Definitions

Sec. 1082 Registration of proxy advisory firms

Sec. 1096 Application of exemption

Sec. 1106 Definition of points and fees

Sec. 1112 Amendments to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989

Cite this provision

Incoming references