Safe, Accountable, Fair, and Efficient Banking Act of 2010 or the SAFE Banking Act of 2010 - Amends the Bank Holding Company Act of 1956 to prohibit a bank holding company from holding more than 10% of the total amount of deposits of insured depository institutions in the United States.
Directs the Board of Governors of the Federal Reserve System to require any bank holding company having a deposit concentration in violation of this Act to sell or transfer assets to unaffiliated firms to bring the company into compliance with this Act.
Prescribes minimum leverage ratios (6% of average total consolidated assets) and balance sheet leverage ratios (6% of tier 1 capital for all outstanding balance sheet liabilities) for tier 1 capital maintained by a bank holding company or financial company.
Authorizes the Board and other federal regulators to grant an emergency temporary exemption from such ratio requirements where necessary to prevent an imminent threat to the financial stability of the United States.
Directs the Board to: (1) establish a leverage ratio and a balance sheet leverage ratio for all operating subsidiaries of bank holding companies and financial companies; and (2) require a noncompliant bank holding company or financial company to raise capital, sell, or otherwise transfer assets or off-balance sheet items to unaffiliated firms (prompt corrective action).
Prohibits a bank holding company from possessing nondeposit liabilities exceeding 2% percent of the annual gross domestic product (GDP) of the United States.
Authorizes the Board to: (1) set a separate liability limit for certain bank holding companies primarily engaged in the business of insurance; and (2) exclude specified deposits from its calculation of nondeposit liabilities if necessary to ensure consistent and equitable treatment of institutions with international operations.
Prohibits a financial company from possessing nondeposit liabilities exceeding 3% of the U.S. annual GDP.
Requires the Board to conduct, and report to Congress on, an annual capital assessment to estimate losses, revenues, and reserve needs for bank holding companies and financial companies.
Amends the Securities Exchange Act of 1934 to instruct the Securities and Exchange Commission (SEC) to issue a rule requiring certain issuers of securities to record all assets and liabilities on their balance sheets and all financings of assets for which the issuer has more than minimal economic risks or rewards.
[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5159 Introduced in House (IH)]
111th CONGRESS
2d Session
H. R. 5159
To provide for a safe, accountable, fair, and efficient banking system,
and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 28, 2010
Mr. Miller of North Carolina (for himself, Mr. Chandler, Mr. Cohen, Mr.
Ellison, and Mr. Sherman) introduced the following bill; which was
referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To provide for a safe, accountable, fair, and efficient banking system,
and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Safe, Accountable, Fair, and
Efficient Banking Act of 2010'' or the ``SAFE Banking Act of 2010''.
SEC. 2. DEFINITIONS.
(a) In General.--As used in this Act, the following definitions
shall apply:
(1) Appropriate federal regulator.--The term ``appropriate
Federal regulator'' means--
(A) the Board of Governors of the Federal Reserve
System (in this Act referred to as the ``Board'');
(B) the Comptroller General of the United States
(in this Act referred to as the ``Comptroller''); or
(C) the Federal Deposit Insurance Corporation (in
this Act referred to as the ``Corporation'').
(2) Average total consolidated assets.--the term ``average
total consolidated assets'' has the same meaning as in part 225
of title 12, Code of Federal Regulations, as in effect on the
date of enactment of this Act, or any successor thereto.
(3) FDIC-assessed deposits.--The term ``FDIC-assessed
deposits'' means the assessment base, as computed under part
327 of title 12, Code of Federal Regulations, as in effect on
the date of enactment of this Act, or any successor thereto.
(4) Financial company.--The term ``financial company''
means any nonbank financial company that is supervised by the
Board.
(5) Liabilities.--The term ``liabilities'' equals a
financial company's total assets less tier 1 capital.
(6) Nondeposit liabilities.--The term ``nondeposit
liabilities'' means the total assets of a bank holding company,
less tier 1 capital, less FDIC-assessed deposits.
(7) Tier 1 capital.--The term ``tier 1 capital'' has the
same meaning as in part 225 of title 12, Code of Federal
Regulations, as in effect on the date of enactment of this Act,
or any successor thereto.
(b) Nonbank Financial Company Definitions.--For purposes of this
Act the following definitions shall apply:
(1) Foreign nonbank financial company.--The term ``foreign
nonbank financial company'' means a company (other than a
company that is, or is treated in the United States, as a bank
holding company or a subsidiary thereof) that is--
(A) incorporated or organized in a country other
than the United States; and
(B) substantially engaged in, including through a
branch in the United States, activities in the United
States that are financial in nature (as defined in
section 4(k) of the Bank Holding Company Act of 1956).
(2) U.S. nonbank financial company.--The term ``U.S.
nonbank financial company'' means a company (other than a bank
holding company or a subsidiary thereof) that is--
(A) incorporated or organized under the laws of the
United States or any State; and
(B) substantially engaged in activities in the
United States that are financial in nature (as defined
in section 4(k) of the Bank Holding Company Act of
1956).
(3) Nonbank financial company.--The term ``nonbank
financial company'' means a U.S. nonbank financial company and
a foreign nonbank financial company.
SEC. 3. DEPOSIT CONCENTRATION LIMIT.
Section 3(d) of the Bank Holding Company Act of 1956 (12 U.S.C.
1842(d)) is amended--
(1) in paragraph (2), by striking subparagraph (A) and
inserting the following:
``(A) Nationwide concentration limits.--No bank
holding company may hold more than 10 percent of the
total amount of deposits of insured depository
institutions in the United States.''; and
(2) by striking paragraph (5) and inserting the following:
``(5) Enforced compliance.--The Board shall require any
bank holding company having a deposit concentration in
violation of this subsection to sell or otherwise transfer
assets to unaffiliated firms to bring the company into
compliance with this subsection.''.
SEC. 4. LEVERAGE RATIO AND SIZE REQUIREMENTS FOR BANK HOLDING
COMPANIES.
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is
amended by inserting after section 5 the following new section:
``SEC. 5A. LIMITS ON LEVERAGE AND SIZE.
``(a) Leverage Ratio Requirements for Bank Holding Companies and
Financial Companies.--
``(1) Leverage ratio.--No bank holding company or financial
company may maintain tier 1 capital in an amount equal to less
than 6 percent of average total consolidated assets.
``(2) Balance sheet leverage ratio.--No bank holding
company or financial company may maintain less than 6 percent
of tier 1 capital for all outstanding balance sheet
liabilities, as determined under section 13(m) of the
Securities Exchange Act of 1934 (15 U.S.C. 78m(m)).
``(3) Exemptions.--
``(A) In general.--The Board may adjust the
leverage ratio requirements provided in paragraph (1)
or (2), for any class of institutions, based upon the
size or activity of such class of institutions. No
adjustment made under this subparagraph may allow an
institution to carry less capital than provided in
paragraph (1) or (2).
``(B) Adjustments.--Consistent with this
subsection, the Board may adjust, by rule, the
definitions of the terms `leverage ratio' and `balance
sheet leverage ratio' to harmonize such ratios with
official international agreements regarding capital
standards, only if the Board determines that the
international capital standards are commensurate with
the credit, market, operational, or other risks posed
by the bank holding companies or financial companies to
which the international agreements regarding capital
standards apply.
``(C) Authority of other regulators.--
``(i) In general.--The appropriate Federal
regulator may, in a manner consistent with this
subsection, grant any bank holding company an
emergency temporary exemption from the ratio
requirements provided in paragraph (1) or (2),
where necessary to prevent an imminent threat
to the financial stability of the United
States.
``(ii) Publication required.--Any exemption
granted under this subparagraph shall be
published in the Federal Register within a
reasonable period after the date on which such
exemption is granted, not to exceed 90 days,
and such publication shall provide--
``(I) the name of the bank holding
company or financial company being
granted an exemption;
``(II) the reason for the
exemption; and
``(III) the plan of the appropriate
Federal regulator detailing the manner
by which the bank holding company shall
be brought into compliance with
paragraphs (1) and (2).
``(4) Leverage ratio requirements for operating
subsidiaries of bank holding companies and financial
companies.--Notwithstanding any other provision of law
applicable to insured depository institutions, the Board shall,
within 1 year of the date of enactment of the SAFE Banking Act
of 2010, promulgate regulations establishing a leverage ratio
and a balance sheet leverage ratio, in a manner consistent with
paragraphs (1) and (2), for all operating subsidiaries of bank
holding companies and financial companies.
``(5) Prompt corrective action.--
``(A) Authorities.--The Board shall require any
bank holding company or financial company that is in
violation of paragraph (1) or (2) to raise capital,
sell or otherwise transfer assets or off-balance sheet
items to unaffiliated firms, or impose conditions on
the manner in which the bank holding company conducts 1
or more activities to bring the company into compliance
with paragraphs (1) and (2).
``(B) Corrective action plan.--The Board shall, not
later than 60 days after determining that a bank
holding company or financial company is in violation of
paragraph (1) or (2), present to the members of the
Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the
House of Representatives a plan detailing the manner by
which the bank holding company or financial company
shall be brought into compliance with the applicable
provision of law.
``(C) Reports to the congress.--
``(i) Written reports.--The Board shall
provide to the members of the Committee on
Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services
of the House of Representatives periodic
reports for each 60-day period during which a
corrective action plan required by subparagraph
(B) has not been fulfilled.
``(ii) Testimony.--The Board shall provide
testimony to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives for each 90-day period that a
corrective action plan required by subparagraph
(B) has not been fulfilled.
``(b) Limits on Nondeposit Liabilities for Bank Holding Companies
and Financial Companies.--
``(1) Bank holding companies.--
``(A) Limit on nondeposit liabilities for bank
holding companies.--No bank holding company may possess
nondeposit liabilities exceeding 2 percent of the
annual gross domestic product of the United States.
``(B) Determination of gross domestic product.--The
annual gross domestic product of the United States
shall be determined for purposes of subparagraph (A)
using the average of such product over the 16 calendar
quarters, as calculated by the Bureau of Economic
Analysis of the Department of Commerce, most recently
completed as of the time of the determination.
``(C) Off-balance-sheet liabilities.--The
computation of the limit under this paragraph shall
take into account off-balance-sheet liabilities.
``(D) Treatment of insurance companies.--
Notwithstanding the liability limit established in this
section, the Board may set a separate liability limit
with respect to certain bank holding companies
primarily engaged in the business of insurance, as the
Board deems necessary in order to provide for
consistent and equitable treatment of such
institutions. In establishing such separate liability
limits for insurance companies, for any insurance
company with any subsidiary regulated by a State
insurance regulator, the Board shall consult the
appropriate State insurance regulator.
``(E) Treatment of foreign deposits.--
Notwithstanding the definition of the term `nondeposit
liabilities' established in this section, the Board may
exclude from its calculation of nondeposit liabilities
any foreign and other deposits not covered by the
definition of the term `FDIC-assessed deposits', if the
Board deems such action necessary to ensure the
consistent and equitable treatment of institutions with
international operations.
``(2) Financial companies.--
``(A) Limit on nondeposit liabilities for financial
companies.--No financial company may possess nondeposit
liabilities exceeding 3 percent of the annual gross
domestic product of the United States.
``(B) Determination of gross domestic product.--The
annual gross domestic product of the United States
shall be determined for purposes of subparagraph (A)
using the average of such product over the 16 calendar
quarters, as calculated by the Bureau of Economic
Analysis of the Department of Commerce, most recently
completed as of the time of the determination.
``(C) Off-balance-sheet liabilities.--The
computation of the limit under this paragraph shall
take into account off-balance-sheet liabilities.
``(D) Treatment of insurance companies.--
Notwithstanding the liability limit established by this
paragraph, the Board may set a separate liability limit
with respect to insurance companies or other financial
companies, as the Board determines necessary in order
to provide for consistent and equitable treatment of
such institutions. In establishing such separate
liability limits for insurance companies, for any
insurance company with any subsidiary regulated by a
State insurance regulator, the Board shall consult with
the appropriate State insurance regulator.
``(E) Treatment of foreign deposits.--
Notwithstanding the definition of the term `nondeposit
liabilities' established in this section, the Board may
exclude from its calculation of nondeposit liabilities
any foreign and other deposits not covered by the
definition of the term `FDIC-assessed deposits', if the
Board deems such action necessary to ensure the
consistent and equitable treatment of institutions with
international operations.
``(3) Prompt corrective action.--
``(A) Authorities.--The Board shall require any
bank holding company or financial company that is in
violation of a provision of paragraph (1) or (2), as
applicable, to sell or otherwise transfer assets or
off-balance-sheet items to unaffiliated firms, to
terminate 1 or more activities, or to impose conditions
on the manner in which the bank holding company or
financial company conducts 1 or more activities to
bring the company into compliance with paragraphs (1)
or (2), as applicable.
``(B) Corrective action plan.--The Board shall, not
later than 60 days after determining that a bank
holding company or financial company is in violation of
paragraph (1) or (2), present to the members of the
Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the
House of Representatives a plan detailing the manner by
which the bank holding company or financial company
shall be brought into compliance with the applicable
provision.
``(C) Reports to the congress.--
``(i) Written reports.--The Board shall
provide to the members of the Committee on
Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services
of the House of Representatives periodic
reports for each 60-day period during which a
corrective action plan required by subparagraph
(B) has not been fulfilled.
``(ii) Testimony.--The Board shall provide
testimony to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives for each 120-day period during
which a corrective action plan required by
subparagraph (B) has not been fulfilled.
``(c) Definitions.--As used in this section, the following
definitions shall apply:
``(1) Appropriate federal regulator.--The term `appropriate
Federal regulator' means--
``(A) the Board of Governors of the Federal Reserve
System (in this Act referred to as the `Board');
``(B) the Comptroller General of the United States
(in this Act referred to as the `Comptroller'); or
``(C) the Federal Deposit Insurance Corporation (in
this Act referred to as the `Corporation').
``(2) Average total consolidated assets.--The term `average
total consolidated assets' has the same meaning as in part 225
of title 12, Code of Federal Regulations, as in effect on the
date of enactment of this Act, or any successor thereto.
``(3) FDIC-assessed deposits.--The term `FDIC-assessed
deposits' means the assessment base, as computed under part 327
of title 12, Code of Federal Regulations, as in effect on the
date of enactment of this Act, or any successor thereto.
``(4) Financial company.--The term `financial company'
means any nonbank financial company that is supervised by the
Board.
``(5) Liabilities.--The term `liabilities' equals a
financial company's total assets less tier 1 capital.
``(6) Nondeposit liabilities.--The term `nondeposit
liabilities' means the total assets of a bank holding company,
less tier 1 capital, less FDIC-assessed deposits.
``(7) Foreign nonbank financial company.--The term `foreign
nonbank financial company' means a company (other than a
company that is, or is treated in the United States, as a bank
holding company or a subsidiary thereof) that is--
``(A) incorporated or organized in a country other
than the United States; and
``(B) substantially engaged in, including through a
branch in the United States, activities in the United
States that are financial in nature (as defined in
section 4(k) of the Bank Holding Company Act of 1956).
``(8) U.S. nonbank financial company.--The term `U.S.
nonbank financial company' means a company (other than a bank
holding company or a subsidiary thereof) that is--
``(A) incorporated or organized under the laws of
the United States or any State; and
``(B) substantially engaged in activities in the
United States that are financial in nature (as defined
in section 4(k) of the Bank Holding Company Act of
1956).
``(9) Nonbank financial company.--The term `nonbank
financial company' means a U.S. nonbank financial company and a
foreign nonbank financial company.
``(10) Tier 1 capital.--The term `tier 1 capital' has the
same meaning as in part 225 of title 12, Code of Federal
Regulations, as in effect on the date of enactment of this
section, or any successor thereto.''.
SEC. 5. CAPITAL ASSESSMENT PROGRAM.
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is
amended by inserting after section 7 the following new section:
``SEC. 7A. CAPITAL ASSESSMENT PROGRAM.
``(a) Annual Assessments.--Beginning 1 year after the date of
enactment of the SAFE Banking Act of 2010, and annually thereafter, the
Board shall conduct a capital assessment to estimate losses, revenues,
and reserve needs for bank holding companies and financial companies.
``(b) Reports.--The Board shall provide a report on the results of
the capital assessment program under this section to the Secretary, the
members of the Committee on Banking, Housing, and Urban Affairs of the
Senate, and the members of the Committee on Financial Services of the
House of Representatives.''.
SEC. 6. AMENDMENT TO THE SECURITIES AND EXCHANGE ACT.
Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m)
is amended by adding at the end the following new subsection:
``(m) Standard Balance Sheet Calculation for Reports.--
``(1) Establishment of standard balance sheet reporting.--
Not later than 1 year after the date of enactment of the SAFE
Banking Act of 2010, the Commission, or a standard setter
designated by and under the oversight of the Commission, shall
issue a rule requiring that each issuer of securities required
to file reports under this section record all of its assets and
liabilities on its balance sheets. The recorded amount of
assets and liabilities shall reflect a reasonable assessment by
the issuer of the most likely outcomes, given currently
available information. Such issuers shall record all financings
of assets for which the issuer has more than minimal economic
risks or rewards.
``(2) Exclusion for indeterminate liabilities.--If an
issuer required to file reports under this section cannot
determine the amount of a particular liability, for purposes of
paragraph (1), such issuer may exclude that liability from its
balance sheet only if it discloses an explanation of--
``(A) the nature of the liability and purpose for
incurring it;
``(B) the most likely and maximum loss that the
issuer could incur from the liability;
``(C) whether there is any recourse to the issuer
by another party and, if so, under what conditions such
recourse could occur; and
``(D) whether the issuer has any continuing
involvement with an asset financed by the liability or
any beneficial interest therein.
``(3) Rulemaking.--The Commission shall promulgate rules to
ensure compliance with this subsection, including enforcement
by the Commission and civil liability under the Securities Act
of 1933 and this title.''.
SEC. 7. EFFECTIVE DATE.
(a) In General.--This Act and the amendments made by this Act shall
take effect upon the date of enactment of this Act.
(b) Allowance for Bank Holding Companies and Financial Companies
Not in Compliance at Date of Enactment.--Any institution that is in
violation of--
(1) the deposit concentration limit in section 3(d)(2)(A)
of the Bank Holding Act of 1956, as amended by this Act, as of
the date of enactment of this Act, shall bring itself into
compliance with that limit not later than 1 year after the date
of enactment of this Act;
(2) the leverage ratios in section 5A of the Bank Holding
Act of 1956, as amended by this Act, as of the date of
enactment of this Act, shall bring itself into compliance with
those ratios, not later than 1 year after the date of enactment
of this Act; and
(3) the limits on nondeposit liabilities in section 7A of
the Bank Holding Company Act of 1956, as added by this Act, as
of the date of enactment of this Act, shall bring itself into
compliance with those limits, not later than 3 years after the
date of enactment of this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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