Swaps Regulatory Improvement Act - Amends the Dodd-Frank Wall Street Reform and Consumer Protection Act with respect to the prohibition against certain federal assistance to swaps entities, namely the use of any advances from specified Federal Reserve credit facilities or discount windows, or Federal Deposit Insurance Corporation (FDIC) insurance or guarantees, for the purpose of: (1) making any loan to, or purchasing any stock, equity interest, or debt obligation of, any swaps entity; (2) purchasing the assets of any swaps entity; (3) guaranteeing any loan or debt issuance of any swaps entity; or (4) entering into any assistance arrangement (including tax breaks), loss sharing, or profit sharing with any swaps entity.
Extends to any major swap participant or major security-based swap participant that is an uninsured U.S. branch or agency of a foreign bank the exemption from the prohibition against federal assistance to swaps entities which is currently limited to any major swap participant or major security-based swap participant that is an FDIC-insured bank or savings association.
Designates both uninsured U.S. branches or agencies of a foreign bank and insured depository institutions as "covered depository institutions."
Requires any covered depository institution exempted from the prohibition to limit its swap and security-based swap activities to hedging and similar risk mitigating activities (as under current law), non-structured finance swap activities, or certain structured finance swap activities. (Defines "structured finance swap" as a swap or security-based swap based on an asset-backed security [or group or index primarily composed of asset-backed securities].)
Qualifies a structured finance swap activity for the exemption if: (1) it is undertaken for hedging or risk management purposes, or (2) each asset-backed security underlying the structured finance swap is of a credit quality and of a type or category with respect to which the prudential regulators have jointly adopted rules authorizing such a swap or security-based swap activity by covered depository institutions.
Repeals the exemption from the prohibition for any insured depository institution that limits its swap and security-based swap activities to acting as a swaps entity for: (1) swaps or security-based swaps involving rates or reference assets that are permissible for investment by a national bank; or (2) credit default swaps, including those referencing the credit risk of asset-backed securities unless they are cleared by a derivatives clearing organization or a clearing agency registered, or exempt from registration, under the Commodity Exchange Act or the Securities Exchange Act.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 474 Introduced in Senate (IS)]
113th CONGRESS
1st Session
S. 474
To amend provisions in section 716 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act relating to Federal assistance for swaps
entities.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 6, 2013
Mrs. Hagan (for herself, Mr. Toomey, Mr. Warner, and Mr. Johanns)
introduced the following bill; which was read twice and referred to the
Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To amend provisions in section 716 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act relating to Federal assistance for swaps
entities.
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 ``Swaps Regulatory Improvement Act''.
SEC. 2. REFORM OF PROHIBITION ON SWAP ACTIVITY ASSISTANCE.
Section 716 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (15 U.S.C. 8305) is amended--
(1) in subsection (b)--
(A) in paragraph (2)(B), by striking ``insured
depository institution'' and inserting ``covered
depository institution''; and
(B) by adding at the end the following:
``(3) Covered depository institution.--The term `covered
depository institution' means--
``(A) an insured depository institution, as that
term is defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813); and
``(B) a United States uninsured branch or agency of
a foreign bank.'';
(2) in subsection (c)--
(A) in the heading for such subsection, by striking
``Insured'' and inserting ``Covered'';
(B) by striking ``an insured'' and inserting ``a
covered'';
(C) by striking ``such insured'' and inserting
``such covered''; and
(D) by striking ``or savings and loan holding
company'' and inserting ``savings and loan holding
company, or foreign banking organization (as such term
is defined under Regulation K of the Board of Governors
of the Federal Reserve System (12 C.F.R. 211.21(o)))'';
(3) by amending subsection (d) to read as follows:
``(d) Only Bona Fide Hedging and Traditional Bank Activities
Permitted.--
``(1) In general.--The prohibition in subsection (a) shall
not apply to any covered depository institution that limits its
swap and security-based swap activities to the following:
``(A) Hedging and other similar risk mitigation
activities.--Hedging and other similar risk mitigating
activities directly related to the covered depository
institution's activities.
``(B) Non-structured finance swap activities.--
Acting as a swaps entity for swaps or security-based
swaps other than a structured finance swap.
``(C) Certain structured finance swap activities.--
Acting as a swaps entity for swaps or security-based
swaps that are structured finance swaps, if--
``(i) such structured finance swaps are
undertaken for hedging or risk management
purposes; or
``(ii) each asset-backed security
underlying such structured finance swaps is of
a credit quality and of a type or category with
respect to which the prudential regulators have
jointly adopted rules authorizing swap or
security-based swap activity by covered
depository institutions.
``(2) Definitions.--For purposes of this subsection:
``(A) Structured finance swap.--The term
`structured finance swap' means a swap or security-
based swap based on an asset-backed security (or group
or index primarily comprised of asset-backed
securities).
``(B) Asset-backed security.--The term `asset-
backed security' has the meaning given such term under
section 3(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)).'';
(4) in subsection (e), by striking ``an insured'' and
inserting ``a covered''; and
(5) in subsection (f)--
(A) by striking ``an insured depository'' and
inserting ``a covered depository''; and
(B) by striking ``the insured depository'' each
place such term appears and inserting ``the covered
depository''.
<all>
Introduced in Senate
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
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